Crain's Cleveland Business

VOL. 39, NO. 16

APRIL 16 - 22, 2018

Source Lunch

Akron Acquisition keeps Ramco growing. Page 21

The List

CLEVELAND BUSINESS

Sean Joyce, Stan Hywet Hall & Gardens Page 23

Money managers, investment advisers Pages 18, 20

Cavs in the playoffs

SPORTS BUSINESS

ONCE MORE FOR THE LAND

Without LeBron: 28-49 in games (.364), 3-13 in series (.188), 13 playoff trips, zero NBA Finals, two trips to East finals 28 49 With LeBron, total: 85-45 in games (.654), 18-7 in series (.720), nine playoff trips (including 2018), four NBA Finals, one title 85 45

No matter how many times I’ve heard the introduction — and I’ve been fortunate enough that it’s been quite a few — it’s always given me chills.

“From St. Vincent-St. Mary High Kevin School in Akron, Ohio, Kleps No. 23, LeBron James.”

OK, reading that isn’t quite the same as the extended, much louder, version by Ahmaad Crump at Quicken Loans Arena. But the point remains: We’ve been really lucky to watch LeBron at The Q the last four years, and for 11 of his 15 NBA seasons, and there are instances in which we need to recognize that.

Now — with the Cavs set to play the Indiana Pacers in a first-round playoff series that tips off Sunday, April 15, and with James’ upcoming free agency poised to dominate another offseason — seems as good of a time as any.

We won’t pretend to know where James is headed when the postseason ends — ideally, for the

Since he returned: 43-16 in games (.729), 10-2 in series (.833), 10-0 in series against the East, 36-5 in games against the East (.878) 43 16

Cavs, via a fourth consecutive trip to the NBA Finals. The national media assumes it’s Los Angeles, where an LLC linked to James has purchased two homes for a combined $44 million in the last 2 ½ years.

The Vegas odds — yes, you can place a wager on with whom James will sign this summer — are more pragmatic. The Cavs and Houston Rockets, at 2.5-to-1, are the co-favorites, followed by the Lakers (4-1), Philadelphia 76ers (5-1) and, gasp, Golden State Warriors (10-1).

Could this be James’ final postseason with the Cavs?

And if it is, would you be OK with that?

SEE LEBRON, PAGE 6

Photograph by Ken Blaze for Crain’s

PHILANTHROPY

KeyBank Foundation grants Rock Hall $10M

By TIMOTHY MAGAW tmagaw@crain.com @timmagaw

It’s only rock ‘n’ roll, but KeyBank likes it — to the tune of $10 million.

Rock & Roll Hall of Fame CEO Greg Harris announced on Saturday, April 14, during the sold-out induction ceremony that the institution had received a $10 million grant from the KeyBank Foundation — a contribution that now stands as the largest philanthropic commitment in the museum’s almost 23-year history.

Key officials say the grant is in recognition of the Rock Hall’s momentum over the past few years. The museum is in the midst of a major refresh, which has translated into a bump in attendance.

Since 2005, on average, attendance at the museum has expanded by 2.7%. That growth was more pronounced in 2017, with a 4.6% attendance increase over the prior year. Last year, Rock Hall visitors pumped $127.4 million — or, on average, $349,000 per day — into the local economy, according to a recent economic report prepared by Tourism Economics, a division of global forecasting firm Oxford Economics.

“The energy is palpable,” KeyCorp chairman and CEO Beth Mooney said in an interview previewing Saturday’s announcement. “This sends a message about how important it is to Cleveland and Northeast Ohio that the Rock & Roll Hall of Fame is here.”

SEE ROCK HALL, PAGE 22

Focus: Finance Surviving the Savings and Loans shakeout. Page 11 Payday lending reform hits a wall. Page 15

REAL ESTATE

Sinito continues hunt for a 925 Euclid deal

By STAN BULLARD sbullard@crain.com @CrainRltyWriter

Entire contents © 2018 by Crain Communications Inc.

Real estate developer Frank Sinito is close to snagging another big downtown deal, taking on the stalled $270 million renovation of the Union Trust Co. building at 925 Euclid Ave. If Sinito, CEO and owner of Cleveland-based Millennia Cos., closes on buying the building or taking a majority stake in the project with current owner Hudson Holdings of Delray Beach, Fla., it would be his fourth blockbuster deal downtown in two years.

It follows the 2016 purchase of the Key Center complex on Public Square, which includes the tallest building in Ohio, 59-floor Key Tower, for $228

million, and buying The Statler apartments, 1127 Euclid Ave., near Playhouse Square for $40 million in January. The $32 million renovation of the Garfield Building, Sinito 1965 E. Sixth St., to apartments with updated retail opened last fall.

More important, Sinito’s infusion of cash and energy could get going the conversion of the massive Union Trust building to more than 600 apartments and other uses that has not proceeded since Hudson Holdings landed a catalytic $25 million state historic tax credit in December 2015.

SEE SINITO, PAGE 22

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Study: Ohio nursing homes skew younger

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

Though nursing homes are considered long-term care options for the elderly, Ohio is seeing a trend of younger residents using the facilities.

In the state, one in five long-stay Medicaid residents are under the age of 65 — a rate that’s higher than the national average, according to a study from Miami University’s Scripps Gerontology Center.

“We’ve typically had this image of a nursing home of being older adults, and now they are middle older adults,” said Ian Matt Nelson, research scholar at the center and co-author of the report.

Using data from the Centers for Medicare and Medicaid Services, the study focused on long-stay Medicaid residents, or those who stay for 100 days or more. As of 2015, Ohio’s ranked 11th in the country for its proportion of such residents.

The study, which was funded by the Ohio Department of Aging and the Ohio General Assembly, is titled “A New Group of Long-Stay Medicaid Nursing Home Residents: The Unexpected Trend of Those Under Age 65 Using Nursing Homes in Ohio.”

Nelson says more research is needed to explain what’s driving the trend. The study does, however, offer a glimpse into how demographics and care needs differ between younger and older residents.

The younger population is more

Nursing home patients in Buckeye State are younger than national average The age distribution of Medicaid long-stay nursing home residents in 2015: Age

0-44

45-54

55-64

65-74

75-84

85-94

95+

Ohio

2%

5.1%

12.8%

17.5%

25.2%

30.5%

7%

2.1%

4.2%

11.1%

17%

25.6%

31.9%

8.2%

Nation

Nursing home residents under 65 Ohio: 19.9% U.S.: 17.4% Nursing home residents 65 and over Ohio: 80.2% U.S.: 82.6% Source: Scripps Gerontology Center at Miami University

What’s causing the early admissions?

Select diagnoses of Ohio’s long-stay Medicaid population in 2015: 0-64

65+

Severe mental illness

47.5%

26%

Paralysis

22.2%

10.5%

Seizure disorder or epilepsy

28%

9.6%

Traumatic brain injury

3.2%

0.5%

Source: Scripps Gerontology Center at Miami University

likely to have a severe mental illness diagnosis but less likely to have a disability that impairs daily living than older residents.

The under 65 long-stay Medicaid population is more likely to have a diagnosis of severe mental illness, paralysis, traumatic brain injury or seizure disorder or epilepsy than older residents. Nearly five in 10 people of the younger Medicaid population has a diagnosis of a severe mental illness, defined as bipolar disorder or schizophrenia.

The report also measures “activities of daily living,” or ADL, impairments, such as a resident’s ability to dress themselves or transfer from

their bed. In 2015, 28% of the population under 65 reported zero or one such impairments, while only 10% of residents over 65 reported such low ADL impairments. The lower ADL impairment indicates a greater ability to function independently.

“A closer look at these residents in both Ohio and nationally indicate that these younger residents are different than their older counterparts on demographic characteristics and care needs,” the study states. “In the years ahead, policymakers will face continued challenges to meet the growing need for long-term services and supports.”

The differences in the under 65 group highlights the need for programs tailored to this population, the report states.

The younger adult group presents a challenge for nursing homes, said Katherine Judge, a professor of psychology at Cleveland State University.

“More research is needed to understand this younger adult group because it seems to be diverse,” Judge said. “And I think the challenge will be how do nursing homes address their needs if they are in fact different than maybe their typical older adult residents?”

Judge also noted that the availability of community based services is a “real challenge” for individuals in this age bracket who might not be ready for a nursing home but have limited options.

“I think the implications are what are we doing on the community side

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TEC H W EEK

and on the nursing home side to address the needs?” Judge said. “It’s not clear for example what community services would best meet the needs of these individuals, or at this point how nursing homes might be able to offer different services to address their needs.”

Nelson plans to further research what’s driving this trend and how to address it.

“The challenge will be how do nursing homes address their needs if they are in fact different than maybe their typical older adult residents?”

— Katherine Judge, professor of psychology at Cleveland State University

“I think the more we understand why they’re using (nursing homes), the more we can get to understanding how options could help,” Nelson said.

The report concludes: “Given the growth in the younger long-stay population, further research is needed to understand what contributes to young low-care residents remaining in nursing homes on a long-stay basis and to examine what steps need to be taken to provide appropriate services to this group.”

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Looking for boost, DDR mulls reverse stock split

By STAN BULLARD sbullard@crain.com @CrainRltyWriter

One split may spawn another at Beachwood-based shopping center operator DDR Corp.

In the latest case, the real estate investment trust will ask its shareholders at its May 8 annual meeting to authorize the board of directors to authorize a 2-for-1 reverse stock split by the end of 2018 if the board decides it is in the company’s best interest.

The request for the action, along with more routine election of directors and other matters, will be tallied at the real estate investment trust’s annual meeting scheduled for the Loews Regency Hotel on Park Avenue in New York City.

The reverse split is included in the company’s proxy filed April 2 with the Securities and Exchange Commission. The step is the opposite of much-ballyhooed stock splits, which allow growing companies with surging stock prices to rise by increasing their number. Instead, it’s to bolster the stock’s value.

Ironically, this split is engendered by another pending DDR move, to split itself into two companies, one consisting of 50 slow-to-grow properties that it wants to sell called Retail Value Inc. (RVI) and keep about 80 that management believes have

long-term growth potential through repositioning and redevelopment in another company it has referred to as “new DDR.�

The SEC filing said the proposed spinout, scheduled for this summer if it wins all required SEC approvals, might generate a significant drop in share values in proportion to RVI’s enterprise value, which could make DDR’s shares less marketable because investors might not want to invest in such low-value shares and

“It’s primarily psychological and a minor positive.� — Chris Kuiper, CFRA Research REIT analyst

could reduce its liquidity.

Even if the spinout does not occur, the reverse stock split might have value for the company because it might improve the marketability of the company’s shares or other benefits, so the board may still consider it, according to the SEC filing. The company said the proposed reverse split would make no other changes in shareholder control of DDR. Chris Kuiper, a REIT analyst at New York City-based CFRA Research, said the likely benefit of a reverse split is to help the company stay on the computer screens of big

institutional investors such as Vanguard and State Street Capital, who hold 80% of the shares in public companies. “It’s primarily psychological and a minor positive,� Kuiper said. Some companies get bounced from big investor lists when their stocks drop below $10 a share. However, in DDR’s case, it’s already below that level, closing Thursday, April 12, at $7.30 a share. The spinout could exacerbate the reduced share value, an issue for the company long before the stock market’s volatility this year that’s been worsened by retailer woes.

Kuiper said he believes the spinout is good for the company because “every company wants to position itself for growth.�

Meantime, rumors have swirled in real estate circles of another round of staff cuts at DDR Corp., both here and around the country, totaling about 50 people. The round of cuts comes almost the same time as DDR made 65 cuts last year, which it revealed in a news release.

DDR CEO David Lukes often speaks of the value of reducing general and administrative costs, including in a presentation at the March 5 Citi Global Property CEO Conference.

However, DDR did not respond to Crain’s requests for comment on the reverse stock split or rumored layoffs.

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CSU professor often is go-to source on content analysis

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

Kimberly Neuendorf isn’t a subject expert on Twitter, though she’s analyzed the social media platform plenty in her work. She’s also not an expert on televangelists, or beef products, or violence on television, or any of the other topics she’s studied over the years.

“I’m a methods expert,” she said.

Neuendorf, a professor in the School of Communication at Cleveland State University, is an expert in content analysis. That’s a skillset that’s made Neuendorf an attractive expert witness and research consultant. And recently, her expertise was called upon in a climate change case related to Irving, Texas-based oil and gas company Exxon Mobil Corp.

The advent of the internet — and the vast amount of content it made available to the public — has increased interest in content analysis.

“Its use has been growing exponentially,” Neuendorf said.

Neuendorf has studied the method since the ’70s, when she was hired to work on a large government grant as an undergraduate student at Michigan State University. The project analyzed anti-social and pro-social behaviors shown on TV, like violence or altruism, respectively. Neuendorf earned a bachelor’s degree, a master’s degree and a Ph.D. from Michigan State, graduating in 1982 and joining the faculty at Cleveland State. Over the years, she has taught content analysis, as well as practiced it, and, in 2002, published the “The Content Analysis Guidebook.”

There are two main types of content analysis: that done by human coders working under a defined set

of guidelines and that done by computer programs searching for specific terms and phrases. The goal is to create objective, repeatable work.

Content analysis can simply aim to answer a question. But if it’s linked to research about the source of a piece of content, or to research about its recipients, it can be far more powerful, Neuendorf said. For example, an analysis of violence on TV could be coupled with research on the kind of content that affects children.

Neuendorf’s work has been broad — she’s worked as a research consultant for the National Cancer Institute, studied news coverage of Art Modell’s decision to move the Cleveland Browns and, perhaps most notably, appeared as an expert witness for Beef Products Inc. in its “pink slime”-related lawsuit. The company had alleged that the ABC network defamed its leanly textured fiber beef by referring to it as pink slime in its ongoing news coverage.

For Beef Products, Neuendorf did a number of analyses, including one of ABC coverage of food stories in a three-year period around the leanly textured fiber beef series. She found more than 100 different storylines — leanly textured fiber beef would count as just one — and that the other high-profile storylines had to do with situations where people died or became ill. The Beef Products coverage just had the “gross-out factor,” she said. That case was the only one where she’s actually had to appear in court, though she’s been deposed on other cases she’s worked on.

In the Exxon Mobil case, Neuendorf hasn’t been asked to serve as a witness, but rather was asked by the legal team on behalf of Exxon Mobil to review an article published in Envi-

ronmental Research Letters that alleged the company misled the public about climate change and whether it’s human-caused. The 2017 article concluded that Exxon Mobil contributed to climate science through its scientists’ academic publications, but then cast doubt in the public through its “advertorials” in The New York Times.

Neuendorf’s review, for which she was compensated, says the content analysis lacked the basic scientific inquiry standards of “reliability, validity, objectivity, generalizability, and replicability” and raised specific concerns about the co-authors’ objectivity. The review stuck to the method of the article, instead of the content of its conclusions.

She declined to speak about the Exxon Mobil case, as it’s still in progress.

The case Neuendorf’s review was filed in is part of an effort to depose some officials in California in a Texas court.

Naomi Oreskes, one of the authors of the work Neuendorf reviewed, is a professor of the history of science and an affiliated professor of earth and planetary sciences at Harvard University. She responded to the criticisms of her work by email, calling it “expertfor-hire doubt-mongering.” Oreskes in the email said that she and Geoffrey Supran, who wrote the Exxon Mobil article with her, believe this kind of debate belongs in peer-reviewed literature, and that if Neuendorf publishes such an argument of their work in such, they would respond.

“No one is perfect, but the whole point of peer review is to subject claims to independent, objective scrutiny. We have always done this with all our work and will continue to do so,” Oreskes said.

Neuendorf did not reply to requests for a response to this criticism prior to publication.

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PA G E 5

Building trades put financial clout to work

By JAY MILLER jmiller@crain.com @millerjh

The building trades unions in Northeast Ohio are using their financial muscle to build the region and keep their members working.

The pension and health and welfare funds supported by many of the 31 unions or district councils in the Cleveland Building & Construction Trades Council (CBCTC) are investing in or lending millions of dollars to many of the most significant real estate developments in the region.

For example, the Employee Real Estate Construction Trust Funds, or ERECT Funds, put $13 million into the $116 million, 20-story One University Circle residential complex that towers over University Circle. It also provided a $9.6 million subordinated bridge loan for the conversion of the former East Ohio Gas Building into 223 luxury apartments, The Residences at 1717 East Ninth Street.

More recently, the AFL-CIO Housing Investment Trust (HIT) agreed to direct the proceeds of a $43 million bond issue created by the federal Government National Mortgage Association as a first mortgage on the $56.9 million Church & State mixeduse project in Ohio City.

“We are not your grandfather’s building trades unions,” said David Wondolowski, executive secretary of the CBCTC. “We have a robust capital strategies program that is very enticing for developers today.”

Wondolowski said that developers are now coming to the unions early in the development process because of the variety of financing options their investment funds offer.

“We can do anything,” he said. “We can do senior debt, subordinated debt, mezzanine loans, we can do equity, we can do construction loans, bridge loans — a whole variety of investment.”

The investors in the ERECT and HIT funds are the pension and health and welfare funds of the unions, said Tad Imbrie CEO of PenTrust Real Estate Advisory Services Inc., a Pittsburgh real estate advisory firm that oversees the ERECT Funds.

Like any pension fund, the building trades union funds take in contributions from employers and employees and make long-term investments to insure benefits when workers retire. Investing in or lending on real estate is a long-term investment similar to the stocks and bonds in their investment portfolios.

Imbrie said a number of Northeast Ohio union funds invest in the ERECT portfolio, and he’s eager that the ERECT Funds continue to invest in the region.

“We pool their money and provide loans and equity financing,” said Imbrie, ticking off Cleveland unions such as Laborers Local 310 and Local 38 of the International Brotherhood of Electrical Workers whose pension and welfare funds invest in the ERECT Funds. “Our goal is to get a good rate of return (for the union funds) and to create jobs.”

Wondolowski and Imbrie were both clear that prudent investments were the primary lending criteria.

But keeping building trades workers earning paychecks was important, too, though Wondolowski said a commitment to 100% union labor can’t always be a requirement since project subcontractors sometimes were not unionized.

An ERECT Funds PowerPoint pre-

sentation describing its recent investments shows four Northeast Ohio projects costing a total of $220.3 million. The ERECT Funds committed $34.1 million toward the total financing packages, and those investments produced $77.5 million in labor, largely union, payroll.

Dan Pedrotty, director of capital strategies for the National Association of Building Trades Unions (NABTU), said the HIT fund and another similar fund, the AFL-CIO Building Investment Trust, make similar loans or investments.

“Job number one for (the pension funds) is getting good returns to pay benefits,” said Pedrotty, who telecommutes from Lakewood for the Washington, D.C.-based NABTU. “But if we can also create jobs in the

process for our members, that’s money coming back into the funds through contributions and work hours. So it’s a win-win.”

The HIT Fund has invested $42 million in three Warehouse District residential renovations in recent years, in the Bridgeview, Crittenden Courts and Marshall buildings.

Stephen Strnisha, CEO of the Cleveland International Fund, a private equity fund, said he has watched the ERECT Funds in particular take a strong interest in investing in the region.

“I know they’ve been pretty consistent in their involvement (in Northeast Ohio),” he said. “Those kinds of funds are very helpful in putting capital stacks together.”

A capital stack is the collection of

financial instruments that total up to the cost of a real estate development.

It’s called a stack because it prioritizes the level of security each loan, equity investment or tax credit has in the project. The largest, secured loan is typically at the top of the stack, but projects can’t go forward until the bottom, smallest loan or investment completes the stack.

Strnisha, who is credited with putting together the 30-plus pieces in the capital stack for the Flats East Bank project, said one reason the union fund investments are important here is because the number of pieces in a financial stack for a project in Cleveland is greater than in a stronger real estate market.

The union funds have been involved in construction lending for years but

have recently stepped up their activity as traditional bank-secured loans have gotten harder to come by.

Graham Veysey, one of the partners in the Church & State project, was invited by Wondolowski and Pedrotty, whom he knew from the year they shared as Presidential Leadership Scholars program sponsored by presidents Bill Clinton and George W. Bush, to a roundtable last summer designed to promote the HIT Fund to developers.

“That’s where the conversation started,” Veysey said. “To have a project where we could use 100% union labor and they also share in the upside is great.”

The HIT Fund investment was the largest piece in the Church & State stack.

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LEBRON

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Av

The easy answer to the first question is of course it could be, but at this point it’s likely James doesn’t even know where he’s headed. How the playoffs unfold, and how the Cavs’ drastically revamped roster fares against an Eastern Conference that again is there for the taking, will play a role in that, as will any moves the LeBron contenders make after the season.

The second question is just as difficult, but for reasons that are far more emotional. (There’s no doubt emotion, and James’ bond with Akron and Northeast Ohio, will play a part in his decision, but if you don’t think there will be a strong “Who gives me the best chance to win another title?” aspect, you haven’t been paying attention the last eight years.)

Some of us will be fine with whatever James decides, because he brought Cleveland its first championship in almost 52 years.

Others will play the blame game, with criticisms that could be aimed at the Cavs (we’ll start with the Kyrie Irving trade), Dan Gilbert (whose ill-conceived letter on the night of The Decision caused such a rift that James has admitted his mom and wife weren’t thrilled about a 2014 return to the Cavs) and James (for leaving the franchise a second time).

Before James gets another chance to stay or go, we think there should be an extended appreciation — say, the length of an NBA postseason — for everything he’s accomplished here.

He’s “The Chosen One” who lived up to the hype.

The one who, in his homecoming letter, said “what’s most important for me is bringing one trophy back to Northeast Ohio.”

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Packing an economic punch When we were making calls during the lead-up to LeBron’s 2014 free-agent decision, former Team Northeast Ohio

LeBron James and the Cavaliers are the favorites to win the Eastern Conference for the fourth consecutive season. (Ken Blaze for Crain’s)

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The LeBron effect Average attendance at The Q The last four years with LeBron: 2017-18: 20,562 (2nd in NBA, 100% capacity) 2016-17: 20,562 (2nd, 100% capacity)

$280M

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Last four years:

$450.9M salaries

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50M

When James was in Miami: 2013-14: 17,329 (16th, 84.3% capacity) 2012-13: 16,192 (22nd, 78.7% capacity) 2011-12: 15,926 (19th, 77.5% capacity)

0

0 2010 2011 2012 2013 2014 2015 2016 2017 2018

*Through 2017-18 regular season

PA G E 7

2017-18: $135.9M salaries $50.8M luxury taxes $186.7M total 2016-17: $126.6M salaries $24.5M luxury taxes $151.1M total

$135.7M luxury taxes $586.6M total

2014-15: $81.4M salaries $6.8M luxury taxes $88.2M total Source: Spotrac

Cavs’ average TV ratings on Fox Sports Ohio

2010-11: 20,112 (3rd, 97.8% capacity) *Consecutive sellouts with James as a Cavalier: 275 (dating to Dec. 12, 2008)

2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Forbes

Source: Forbes

|

2015-16: $107M salaries $53.6M luxury taxes $160.6M total

100M

2014-15: 20,562 (2nd, 100% capacity)

A P R I L 16 - 2 2 , 2 018

Payroll

900M

150M

2015-16: 20,562 (2nd, 100% capacity)

CEO Tom Waltermire told us, “It’s crazy to try to base an economy on an athlete or team.”

That’s unquestionably true, but James is the one star who at least makes you rethink the “sports is just a reallocation of a region’s entertainment dollar” premise.

The Cavs entered the playoffs having sold out all 192 regular-season and postseason games at The Q since James returned. And if you extend the window to his previous Cavs tenure, the streak dates back to December 2008, or 275 consecutive sellouts.

The Cavs’ average attendance during James’ final three seasons in Miami ranged from 15,926 to 17,329 per game.

The bulked-up gate numbers provide temporary boosts to surrounding bars and restaurants, and, more importantly, mean more people are visiting from outside of the region.

Cleveland collected $9.9 million in admissions taxes from all events at The Q in 2014-15, James’ first season back.

That total more than doubled the $4.7

Franchise value

|

2008-09: 8.77 (No. 1 in NBA)

million in admissions taxes for 201314, when the 33-win Cavs had Dion Waiters as Irving’s running mate.

In 2015, Destination Cleveland estimated that each Cavs home playoff game provided a $3.6 million jolt to the local economy, and the impact increased to $5 million for each NBA Finals contest.

Prior to this spring, the Cavs have hosted 28 playoff games, including eight Finals matchups, since 2015 — and the first number would be significantly higher if they hadn’t been so dominant against the East (to the tune of 36-5 in the previous three postseasons). If you use Destination Cleveland’s old math, that’s an impact of $112 million, before you factor in the 2018 playoffs, the 164 regular-season games at The Q the last four years and all of the free advertisements and brand recognition that comes from LeBron James representing your region for eight months of national broadcasts.

“It’s a combination of having LeBron and Nike advertise your city for

2009-10: 8.55 (No. 1 in NBA)

During LeBron’s four seasons in Miami: 3.45

you,” former Levin College of Urban Affairs dean Ned Hill once told us.

The Cavs with James are a global force.

Golden State and Cleveland are the most popular NBA teams in China. The Cavs’ combined following of 18 million on Facebook, Instagram and Twitter is the league’s fifth-best, and well ahead of every NFL and MLB club, including the likes of the Dallas Cowboys (14.9 million), New England Patriots (14.4 million) and New York Yankees (13.8 million).

Yes, they’re ridiculously dramatic, and often just as likely to end up on TMZ as “First Take.”

But thanks in large part to James’ extended brilliance — which in Year 15 and with a combined regular-season and playoff minutes total that already ranks 11th in league history, defies every probability — they’ve been a guaranteed contender.

The Cavs’ combined 29 playoff wins in 2016 and ’17 are one ahead of the franchise’s total during 13 playoff trips without the King, and their

2014-15: 7.94 (No. 2 in NBA)

2015-16: 9.31 (No. 2 in NBA)

three series victories last spring matched the pre-LeBron tally.

And if you’re the type who enjoys watching one of the two best players in the history of the game for twothirds of the year (imagine that), this season has somehow upped our levels of amazement.

James, at age 33, just finished his first 82-game regular season — one that, by any metric, was his best since he returned and one of the three or four best of his ridiculously productive career.

He could continue to play on a series of short-term, prove-it contracts, but at this point the more likely move would seem to be signing a maximum, long-term deal this summer.

The Cavs can offer one more year than everyone else, and that five-year contract would top $200 million.

With James on the books for a maximum of $35.7 million in 201819, the Cavs’ payroll, depending on how the rest of the offseason shakes out, could easily approach $300 million in salaries and luxury taxes. Even

2016-17: 7.38 (No. 2 in NBA)

2017-18: 7.98 (No. 2 in NBA)

by Gilbert’s “spend-at-all-costs” standards, that’s an almost-unfathomable jump from an estimated $187 million this season — a total that’s on track to be the second-largest in league history.

That debate — how to best spend Dan Gilbert’s money — is one we hope to be having this summer, after James commits to the Cavs for the long haul.

But the odds, depending on your perspective, are almost as good, or better, that the discussion will be much different, and begin with how to move on from one of the most impactful athletes in Cleveland sports history.

Those discussions — whether jubilant or painful — are a few months away, though.

For the next two-plus months, LeBron James will be leading the Cavs in the postseason.

Savor every second.

We don’t know when the Cavs will be in the NBA Finals again.

But we do know that with James, anything seems possible.

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PA G E 8

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CRAIN’S CLEVELAND BUSINESS

Opinion Letter to the Editor

Flawed research not useful amid opioid epidemic

Editorial

Look forward The March 31 bankruptcy filing by Akron-based FirstEnergy Solutions Corp. was a long time in the making. The company's preferred solution — a bailout from the federal government — isn't appropriate in our view. But FirstEnergy Solutions does deserve a quick response from U.S. Energy Secretary Rick Perry so the company knows where it stands and can plot its next moves accordingly.

FirstEnergy Solutions, the power-generating unit of FirstEnergy Corp. (which is not part of the Chapter 11 filing), wants Perry to invoke what's known as 202 authority to order a grid emergency. That emergency would guarantee profits for the company's ailing coal and nuclear power operations, including the Perry Nuclear Power Plant in Lake County and the Davis-Besse Nuclear Power Station near Toledo, both of which are slated for closure. The stakes are high; there are more than 3,000 employees at the subsidiaries included in the bankruptcy filing.

As The Wall Street Journal pointed out in a story last week, such emergency orders "have been used lightly — almost surgically — in the past to keep one or a few plants running." But the emergency order requested by FirstEnergy Solutions, if approved, "would affect a whole class of power generators across a large, multistate region and set an important precedent," The Journal noted.

The primary issue is that a 202 order would affect the power market overseen by PJM Interconnection LLC, which serves about 65 million customers from New Jersey to Illinois. One analyst told The Journal that if the feds grant the emergency request, "what they’ll essentially have done is completely destroyed the competitive power market in PJM." In other words, it would cost consumers more money and would penalize companies that have been more successful in diversifying their generation mix to gas and renewables.

At last week's Bloomberg New Energy Finance Future of Energy Summit in New York, Perry said the FirstEnergy Solutions request "may not be the way that we decide is the most appropriate, the most efficient way to address this. It's not the only way."

He didn't specify the alternatives. The Third Way think tank has

advocated a federal low-carbon power mandate, a move that makes sense but seems unlikely with a Republican Congress. Other experts have suggested the expansion of existing state renewable electricity standards into broader clean energy standards that raise targets while crediting existing nuclear generation.

FirstEnergy Solutions early this decade made a bet on nuclear power and, in particular, coal, when it bought Allegheny Energy Inc. That gamble hasn't worked, as the subsequent fracking revolution led to the wide availability of cheap natural gas.

Government statistics show that natural gas in 2017 accounted for 32% of U.S. electricity generation, surpassing coal, which was at 30%, compared with 45% entering the decade.

The government's interest should be in helping to provide a longterm solution to the problems facing FirstEnergy Solutions and other coal and nuclear producers while protecting the security of the electrical grid, not in looking backward with an emergency order.

One more time

It's been a bit of a tough run of late for Akron, which in addition to the FirstEnergy Solutions bankruptcy is losing the prestigious Bridgestone Invitational golf tournament (though it will be replaced by the Bridgestone Senior Players Championship in 2019) and last week saw its daily newspaper, the Beacon Journal, be sold to GateHouse Media for $16 million — less than 10% of what Black Press paid for it in 2006.

What better time, then, for Akron legend LeBron James to rise up (apologies for the now-dated slogan) and lead the Cleveland Cavaliers to another deep run in the NBA playoffs?

This hasn't been the year Cavs fans, players or management were expecting. But it's a new season now, one that James has dominated for nearly a decade in two cities. Regardless of whether it's his final playoffs with the Cavs, fans at The Q should bring the same intensity this generation's best player has displayed when titles are on the line.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

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A recently released study is promoting a flawed — and possibly dangerous — perspective on an important tool in the arsenal against the opioid addiction and overdose epidemic currently facing Americans.

Public health researchers and interventionalists have long understood that providing public access to naloxone is a necessary tool among many in the effort to save lives amidst this crisis. As a result, we at the Northeast Ohio Hospital Opioid Consortium are dismayed by a newly published manuscript titled “The Moral Hazard of Lifesaving Innovations: Naloxone Access, Opioid Abuse, and Crime,” by economists Jennifer Doleac and Anita Mukherjee.

The authors suggest the use of naloxone, which is a rescue drug that can reverse opioid overdoses and save lives, exacerbates opioid usage and contributes to crime. This study omits more than 20 years of public health research on naloxone access and its effects on mortality and drug use among those who are at risk of opioid overdose. While Doleac’s and Mukherjee’s research has not yet undergone more serious scrutiny and analysis by way of peer review, it may still contribute to stigmatized viewpoints and policies that could hinder efforts to save lives in a time of unprecedented need.

It is not our wish to dismiss thoughtful criticism of the unintended consequences of public health interventions like naloxone distribution, but any analysis regardless of its leanings should be well informed, peer reviewed, and clearly defined given the potential impact on policy and the fact that, quite literally, people’s lives hang in the balance.

Doleac’s and Mukherjee’s research, which focuses on naloxone access and its effects on opioid abuse, mortality and crime, is noticeably flawed. First, the authors claim naloxone access led to an increase in opioid overdose mortality, and especially fatal fentanyl-related overdoses, in the Midwest. Yet, arguably, it is fentanyl and not naloxone that exacerbated the opioid crisis in these areas. The rise in fentanyl-related deaths is a result of the combination of the drug’s high potency and increased availability among street drug markets.

Drug cartels and dealers have increased their profits and their drugs’ potency by introducing stronger opioids into the street market, oftentimes without the knowledge of those who use the drugs. The street drug market is, therefore, not user driven. This phenomenon is especially true in the Midwest, and specifically in Ohio where fentanyl and carfentanil drug exposure has caused soaring death rates due to its high prevalence in the street drug market.

Furthermore, a recent study in Rhode Island found that study participants “described fentanyl as unpleasant, potentially deadly, and to be avoided.” In other words, individuals who use drugs are often unaware of the drugs they are about to consume that end up taking their lives or resulting in a near fatal overdose.

Doleac’s and Mukherjee’s study examines naloxone use in the context of moral hazard theory, exploring the hypothesis that individuals are more likely to take risks with opioid usage based on a perception of safety as a result of naloxone access.

However, multiple studies have found that opioid use decreased among individuals after engagement with a naloxone harm reduction program. Further, another working paper by economic researchers finds the adoption of naloxone access laws has resulted in a reduction in opioid-related deaths.

Unfortunately, none of this research was mentioned by Doleac and Mukherjee. Instead, the authors cited media anecdotes of “naloxone parties,” that have been debunked by public health researchers, practitioners and people who use opioids.

SEE OPIOIDS, PAGE 9

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com.

Please include a telephone number for verification purposes.

CRAIN’S CLEVELAND BUSINESS

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PA G E 9

At the Table

Cleveland stepping front and center in Beard Foundation burger contest On the face of it, a push to include chopped mushrooms in burgers feels like a stretch.

Yet tens of millions of consumers express conJoe cern over the Crea nutritional content of the food they eat. And replacing a portion of meat in ground beef with a nonanimal protein that improves texture, brings in an array of nutrients and adds that elusive yet appealing “fifth flavor” factor called umami could be a step to make one of the nation’s most popular foods healthier.

And that could help chefs and restaurateurs along the way.

That’s where an initiative by the James Beard Foundation called the Blended Burger Project comes in, and Cleveland will be a big part of it.

Supported by the Mushroom Council, a marketing trade organization that promotes the sale and use of cultivated mushrooms, the Blended Burger Project proposes a simple premise: replace 25% of the beef or other meat in burgers with an equal amount of chopped mushrooms.

It’s a long-standing culinary sleight of hand. During the 1970s when I worked as a country club chef, we mixed minced mushroom stems, often discarded as waste, into ground meat for sandwiches. In terms of texture and moisture content, chopped mushrooms fairly emulate the characteristics of ground beef, pork, lamb and poultry. Coarsely chopped cultivated ’shrooms are a comparatively inexpensive way to stretch more expensive forms of animal protein.

And maybe it’s a more prosaic result, but many consumers argue the resulting burgers are juicier, too.

Then there’s the umami factor.

Naturally occurring chemical compounds in mushrooms (and a variety of other foods, including some seafood products, bean pastes, dairy products and tomato extracts) promote a sensory effect that enhances other flavors in foods. Coined during the early 20th century by Japanese food scientists, umami essentially translates to an indescribable “yumminess” or “deliciousness.” Worcestershire, soy and fish sauce, and even ketchup effect a similar heightening of flavor.

Mushrooms are also unsung nutritional heroes. Cultivated domestic mushrooms — the common “button” variety, with variants such as Crimini and Portobellos — earn the “superfoods” label. They’re high in

OPIOIDS

CONTINUED FROM PAGE 8

The opioid crisis is a complex issue and the result of a disastrous perfect storm of events. Naloxone access alone will not eradicate our nation’s opioid crisis, but its absence would undoubtedly contribute to the growing number of deaths. Lay responder naloxone access between 1996 and 2014 resulted in over 26,463 rescues and continues today to save thousands of lives annually.

While Doleac and Mukherjee are not explicitly advocating for eliminat-

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Americans love burgers, and Cleveland is playing a starring role in making them healthier by adding mushrooms to the mix. (iStock)

fiber and a fairly good source of protein. They’re low in carbohydrates and packed with an array of micronutrients: selenium, iron and several B vitamins. They are a valuable source of antioxidants and anti-inflammatories.

Enter the Blended Burger Project.

The Beard Foundation — the group that hosts the annual James Beard Awards, widely considered the Academy Awards of the culinary and restaurant world — is hosting a national contest to recognize the best burger creation made with a meat-mushroom blend.

And enter Cleveland.

“Cleveland has been selected by the Beard Foundation as a major market for the competition this year,” said Myra Orenstein, executive director for Cleveland Independents, a trade organization representing more than 80 Northeast Ohio restaurants.

That kind of promotional push is typically reserved for major metropolitan areas such as Southern California and the New York metro area.

Orenstein considers it an opportunity to draw greater attention to Northeast Ohio chefs and among consumers who might subsequently vote, increasing the area’s chances of landing a spot among the finalists and in the Beard House showcase.

Roughly two dozen Ohio restaurants, most of them in the Cleveland area, competed in the 2016 and 2017 contests. Orenstein said she’s aiming to get as many local chefs and restaurateurs involved in the competition, now in its fourth year, by creating their own blended burger recipes. It’s

a chance for them to step into the national spotlight by winning one of five prizes: cooking their creation at the famed James Beard House in New York City.

Orenstein admitted she was a bit skeptical about the premise.

“But as I talked to chefs, across the board, every chef I talked with said it’s true: Blending mushrooms into different kinds of meat WILL give you a better burger. I haven’t had any disagree with the concept, and burgers have been entering using surprising ingredients like venison, bison, turkey.

“And by putting in a plant-based food like mushrooms into the burger, you’re creating a lower-calorie, lower-cholesterol, lower-saturated-fat burger.”

From Tuesday, May 29 through Tuesday, July 31, contestants can enter. Essentially, they must be of legal age in any of the 50 states and must be a chef, restaurateur or worker where food is prepared and served to the general public.

During that same period, the public can vote for their favorite blended burger. Those who vote will be entered into a contest to win an expenses-paid trip for two to New York City to attend the 2018 Blended Burger Event at the James Beard House.

In turn, a panel of food experts selected by the Beard Foundation will select the top five winners from the top 20 candidates chosen by the online vote. The five winners will cook at the 2018 Blended Burger event.

The complete list of contest rules, entry guidelines and deadlines can be found online at jamesbeard.org/ blendedburgerproject.

ing public naloxone access, we fear their assertions may lead policymakers to advocate for decreased accessibility. We write, therefore, in an effort to ensure that naloxone will remain an accessible tool to the public and instead hope that we can together engage in a constructive discussion of how to better respond to American’s number one public health crisis.

Dr. Randy Jerenjcic, University Hospitals Dr. Lisa Yerian, Cleveland Clinic Dr. Ted Parran, St. Vincent’s Charity Medical Center Dr. Kevin Smith, Northeast Ohio VA Healthcare Systems Dr. Tom Collins, Academy of Medicine of Cleveland and Northern Ohio Michele Fancher, grant development manager, The Center for Health Affairs Lisa Anderson, senior vice president of member services, The Center for Health Affairs Emily Metz, manager, MetroHealth Office of Opioid Safety

Northeast Ohio Hospital Opioid Consortium Allisyn Leppla, executive director, Northeast Ohio Hospital Opioid Consortium Dr. Joan Papp, MetroHealth

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FINANCE

S&L shakeout Ever-evolving banking trends have put Savings and Loans on the financial industry’s endangered species list.

But the strong survive — and thrive.

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

In the banking kingdom, the thrift model may be an endangered species.

The ever-evolving landscape for banking has all but eliminated most of the perceived purpose and benefits of the thrift model. It’s one of several reasons the number of thrifts — an umbrella term for banks operating as savings and loan association (S&Ls, as they’re more commonly known), and mutual banks, a type of model featuring at least a majority ownership by depositors that’s existed since the early 1800s and at one time had a large presence in Ohio and through New England — has dwindled through the years. Regulatory and financial pressures are culprits as well.

Those financial institutions have been converting their charters to commercial banks or are otherwise being acquired and merged into growth-hungry peers. It’s all part of a wave of consolidation driven by modern financial and regulatory pressures that have been difficult for smaller banks to manage, which these firms tend to be.

“If you’re a smaller financial institution, and for the last 20 or 30 years or so you’ve been in mortgages and that’s what you know, all of a sudden in the aftermath of Dodd Frank there are more compliance standards and risk management required. It’s a very difficult environment for these institutions to

operate in,” said Kevin Jacques, Boynton D. Murch chair of finance at Baldwin Wallace University and a former bank regulator. “I don’t think they’ll ever go away in the sense of becoming extinct. But there is definitely enormous pressure there. And I think their numbers will continue to trend down.”

Home Savings Bank, formerly Home Savings and Loan Association of Youngstown , converted its charter at its holding company from a thrift to a bank in early 2017. It did so as part of its acquisition of Premier Bank and Trust. It's currently one of the market's fastest-growing community banks.

For CEO Gary Small, it’s a sign of the times for the bank of roughly $2.6 billion in assets and reflects the bank’s more diversified and commercial-driven approach, which it sees as the best path to growth in today’s market.

“We moved to a bank charter, and effected a name change, dropping the S&L moniker, as it better reflects the Home Savings Bank business mode: commercial banking, residential mortgage, consumer banking and wealth management business groups,” Small said. “The simultaneous charter and name change just better reflects who we are.

There are some lending restrictions under the thrift charter, but those issues were not a driver in our decision.”

Patricia Oliver, a Cleveland attorney and bank consultant with Tucker Ellis, devotes a large part of her time to working with community banks and has helped with some local charter conversions.

“These banks were founded as an integral part of the community to provide resources for people who wanted consumer lending and residential mortgages,” Oliver said. “But some would say they’re actually dinosaurs at this point.”

Shedding thrifts According to a report from the Federal Deposit Insurance Corp., there were roughly 4,000 state or federally chartered S&Ls in 1980 with a combined $604 billion in assets.

As of year-end 2017, there were just 754.

However, those few hundred institutions have assets of about $1.1 trillion.

In Ohio, the number of S&Ls has dwindled from 94 in 2010 to 69 today, according to Ohio Bankers League spokesperson James Thurston. Assets in those institutions are still around $40 billion, while net loans there have increased from $29 billion in 2010 to $31 billion today.

The decline in S&Ls has ultimately been less steep than that of community banks overall those institutions fall within, but that’s simply because they have a smaller base to fall from.

SEE THRIFTS, PAGE 14

Illustration by MHJ Digital Vision Vectors/ Getty Images

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CRAIN’S CLEVELAND BUSINESS

FINANCE

Colleges aim to be debt-free as they upgrade campuses

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

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We See Your Entire Business

Kent State University is moving forward with a $1 billion makeover of its main campus — and it is planning to do so, at least the $220.8 million first phase, without issuing any new debt.

Kent State is far from alone among its peers in trying to avoid taking on new debt while upgrading its facilities.

But the university believes it is being particularly creative in how it’s approaching the ambitious plan that is expected to add more green space, a central entryway and modern labs and academic buildings to its sprawling Kent campus over the next decade. The size of the plan is notable in and of itself, but so is the way the university is footing the bill for the project through a mix of philanthropy, public dollars and investment from contributions from private developers.

The diverse funding mix is a far cry from the way universities in Ohio and elsewhere in the country have upgraded their physical plants over the last decade or more. The University of Akron, for one, added almost two dozen new buildings during Luis Proenza’s 15-year term as president through an expansive $640 million building spree that was financed largely by issuing new debt. And even Akron has shied away from adding new debt in recent years as it focuses on the upkeep of its buildings.

The lion’s share of the $220.8 million first phase of Kent State’s project — $127.4 million — is expected to come via public-private partnerships and philanthropy, or, in at least one case, a combination of both. The rest is expected to come from Kent State’s own reserves and the state capital budget.

The jewel of that first phase will be a new home for the university’s College of Business Administration that’s slated to cost $72.3 million.

Typically, public-private partnerships are used in projects that have a revenue-generating component, like housing or a parking garage, said Mark Polatajko, Kent State’s vice president for finance and business operations. Kent State taking a different approach through what it’s calling its “P4” model —a public-private-philanthropic partnership. While universities have never shied away from raising money for capital projects, this model would encourage the developers to introduce philanthropic pieces as part of their pitches.

Polatajko said the university wanted to fund the business building entirely by philanthropy, but raising all that money upfront would have taken far too long. This approach could help get construction underway faster. The P4 approach asked developers to essentially use philanthropy for what would be the revenue source in a traditional public-private partnership, considering there isn’t an obvious revenue-generation component with academic buildings. After the plan

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FINANCE

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An early rendering shows how Kent State would like to add an array of new structures to its iconic front campus. (Contributed rendering)

was approved by Kent State trustees in March, President Beverly J. Warren said options from developers could range from offering in-kind services to leasing a building to Kent State, instead of requiring up-front payment.

Polatajko said after a request for quotation, the university invited five developers to submit proposals, and four have entered the competition to design and finance the new College of Business Administration building.

The four design proposals were scheduled to be revealed to the public the evening of Thursday, April 12, and details were not available prior to Crain’s print deadline.

Polatajko said the university will analyze the concepts have been proposed and expects an update for the board at its meeting in June.

As to whether Kent State will continue to use the P4 model in the future, Polatajko was hesitant to commit. It’s a model that he hasn’t heard of being used elsewhere.

“So we’re really testing the waters,” he said.

The phased approach of this plan will let Kent State assess different financing options, as well as the status of the market. The plan has three phases, plus a host of projects that aren’t assigned to a particular phase but are instead left open for independent funding.

“This plan does have that flexibility, which is so vital,” Polatajko said.

More debt? No way Kent State, of course, isn’t the only university looking for financial flexibility while upgrading their campuses.

About five years ago, for example, Youngstown State discovered it had a deferred maintenance backlog of about $200 million. State capital funds have declined over the years, and to make up the difference, the university has issued bonds to pay for the fixes.

But that can be a “strain” on the university’s finances, said Neal McNally, the university’s vice president for finance and business operations.

Recently, Youngstown State decided to plan ahead for future investments by liquidating about $8 million in investment earnings. That money’s been set aside for capital improvements, McNally said, though specific projects have yet to be identified. That’s not something the university does often, but the market has been favorable recently.

And one way the university has continued to expand is through partnerships with private developers. The university has leased some of its property to private developers to build dorms. That helps the university meet student housing needs, but none of the debt or liability falls on Youngstown State, McNally said.

Youngstown State students recently signed off on a new student fee that would pass through the university to pay for a new health center operated

by Mercy Health, which has a significant presence in the Mahoning Valley.

Lakeland Community College in

Kirtland took a similar approach when building its Holden University Center, which opened in 2011 and is available to community partners offering fouryear or graduate degree programs.

The college brought in an outside

developer — Cleveland-based Premier Development Partners — who built the center on property adjacent to it, said Mike Mayher, executive vice president and treasurer for Lakeland. The developer left open the option for the college to acquire the center, which it did for $13.5 million in 2014. For the college to build the center under state laws at that time would have taken at least three years, Mayher said, but going the public-private partnership route allowed Lakeland to get the Holden University Center built within nine months.

North Canton-based Stark State College’s approach is more traditional.

Stark State’s board is pretty “averse to debt,” said Tom Chiappini, vice president of business and finance and treasurer, and it’s worked hard to not add debt to its books. The college did take out about $20 million in Series A

and Build America bonds in 2010, but it was able to pay off the bonds early when the sequester triggered that option, saving more than $7 million in interest costs. Right now, the college has just about $1 million in debt, which should be paid off in June 2019.

For the college’s new Akron campus, the board allocated $8 million from the college’s annual operating budget surplus to add to the funding it received from the 2017-2018 state capital budget. Instead of taking out debt, the college is funding the project in phases. The ground level and the third floor of the new Akron building were built so the college could expand into them as the funding came in through the state capital bill.

Lakeland’s expansion programs rely on three main sources of funding: state capital funds, a bond-issue levy

and internally generated funds. And the college is always looking for special financing efforts, like the Ohio Air Quality Development Authority funding secured for the construction of its newly opened health-related building, which uses a geothermal heating and cooling system.

Through the program, the Ohio Air Quality Development Authority bid on about $10.4 million of qualified debt on Lakeland’s behalf, Mayher said. The 13.5 year financing with a Bank of America subsidiary started in June 2016. Total interest will be about $2.4 million, minus about $1.6 million in federal energy tax credits Bank of America will receive. That leaves Lakeland responsible for just about $760,000 in interest on $10.4 million of debt.

“That’s as good as it gets,” Mayher said.

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THRIFTS

CONTINUED FROM PAGE 11

The bulk of those banks were shed between 1986 and 1995, a period known as the S&L crisis. During that time, interest rates skyrocketed, which in turn drove down the value of conventional mortgages those banks had on the books. That put several institutions under water, wiping out roughly one-third of the S&L population. It’s why S&Ls today tend to self-impose extremely high capital ratios on themselves that are often double of what the FDIC requires of commercial banks.

What’s led to the consolidation more recently, though, are the very issues affecting more community banks, including the costs of revamping products and services for a digital world and to comply with onerous Dodd-Frank regulations that were ultimately designed with too-big-tofail banks in mind, not small community banks.

Meanwhile, in 2011 in the wake of the recession, the primary regulators

for thrifts changed as the Office of Thrift Supervision was eliminated. A perceived benefit to operating as a thrift was having a dedicated regulator. Now, though, thrifts are supervised by either the FDIC or the Office of the Comptroller of the Currency.

So S&Ls have been converting to more commercial models to grow.

Their regulators have changed. Add into that Dodd Frank regulations that have taken a one-size-fits-all approach to banks, and the lines between various thrifts and commercial banks has only further blurred.

The surrounding issues can be even more acute for mutual banks.

While similar to credit unions in their depositor ownership, mutuals pay taxes credit unions don’t. They also don’t have the same means to raise capital as their stock-based peers. That can even make it harder for those banks to land top talent as many banks include stock perks in their executive compensations.

Smaller thrifts and community banks tend to make deals based on handshakes and how well they know a person, relying less on data and algo-

Staying alive

Fraser

Stefanski

rithms. As those banks fade away, so do those opportunities for customers.

“The relationship model is what’s really at risk here because the regulatory agencies says, prove to us this is a transaction you should’ve done,” said Bob Palmer, president and CEO of the Community Bankers Association of Ohio, one of many trade groups fighting for regulatory relief.

“It’s very much become a checklist, which is why we’re fighting for a different regulatory model,” Palmer added. “There is no reason why a rule that falls on (JPMorgan Chase CEO) Jamie Dimon’s desk should fall on the desk of a mutual. They’re two different animals. But a bank is a bank is a bank. That’s the perception.”

Some Congressional bills are targeting regulatory relief for smaller banks and other benefits for S&Ls, but there haven’t been any actual changes yet. Despite the challenges for these thrifts, many are not just holding out, but sensing an opportunity for their banks to once again resonate in the market.

Third Federal Savings and Loan Association of Cleveland formed a mutual holding company in 1997 to issue stock to raise capital, which it wouldn’t actually do until 2007 when it raised $1 billion in an IPO (which helped the bank excel through the then-unexpected recession with that was about to hit with a 20% capital ratio in what CEO Marc Stefanski has described as a lucky coincidence). Maintaining those high capital levels is personally important to Stefanski, who inherited the bank in 1987 from his father who lived through the Great Depression.

Only about 20% of the bank's stock is outstanding to the public.

For personal and business rea-

sons, Stefanski has no intentions of selling the bank or moving away from a thrift model.

“There is no doubt that this is an old, traditional model that didn’t work in the minds of a lot of people. That’s why they convert,” Stefanski said.

So what does Stefanski think of the notion that thrifts are doomed to obsolescence?

“We think we’re the best in the business at what we do,” he said. “We come up with creative ways to benefit people interested in buying a home, and we do it better than anyone else.

If you’re the best in the business, there’s a good chance you’ll still survive regardless of what the peanut gallery says about what you should or shouldn’t be doing.”

Tom Fraser, CEO of First Federal Lakewood, feels similarly.

Fraser converted the bank’s parent company to the no-stock First Mutual Holding Co. in 2015. Besides a symbolic commitment to the mutual bank structure, declaring it won’t offer any stock whatsoever in its current form, its model now lets the bank affiliate with other mutual

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banks who may be struggling, making each bank stronger in the process and letting the partnered banks maintain their independent structures.

Since the conversion, First Mutual Holding has merged in Belpre Savings Bank in Southeast Ohio and Doolin Security Savings Bank in Parkersburg, W.Va. It’s a pioneering move for that sector of the industry.

Fraser referenced the movement anti-Wall Street sentiments that have arisen in recent years among the populous and the suggestions for post office banks. Advocates of those might be interested in mutual bank that is squarely owned by depositors and doesn’t answer to stockholders, he said. “So I would argue mutual are more relevant and important than ever,� he said. “Mutuals were once created by neighborhoods and immigrant groups wanting to organize themselves. We have a similar challenge today in how consolidation has hollowed out areas where there is no banking access.�

Besides the philosophical importance of the mutual structure, he said gaining scale through the affiliations with other mutuals plus smart decision-making will help these banks grow and remain independent despite the regulatory pressures for thrifts of all makes and models.

But in terms of tapping into the feelings of people would probably prefer a mutual bank, their message simply needs to get out there. “Because mutual are effectively a community asset, we have no cheerleader, no one really telling the story and the good work we do. It’s a weakness we have,� Fraser said. “The mutuals who are left, who survived the credit crisis and these conversions are deeply committed to mutuality and expanding those concepts. But we have to tell our story.�

Payday lending reform hits a wall Industry advocates say too much regulation could force its shops out of business

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

Opponents of the payday lending industry in Ohio have been waiting a long time for regulatory reform that would make those loans more affordable and cap annual percentage rates that have reached as high as 790%.

To the dismay of groups like Ohioans for Payday Loan Reform — which wants a strict 28% cap on interest rates and the closing of loopholes that allow payday lenders to charge a series of fees that amount to the exorbitant rates — they’re still waiting.

Payday lending groups indicate they’re open to new regulations on how they do business in the state, but virtually no progress has been made since HB 123, a bill designed to do just that, was introduced in March 2017. “There hasn’t been any significant movement in the many months that bill’s been pending,� said Katherine Hollingsworth, managing attorney of the consumer practice group for the nonprofit Legal Aid Society of Cleveland, which represents some borrowers when payday and auto title lenders threaten to sue them or repossess their cars. “From the advocates perspective, there is certainly frustration that there hasn’t been movement.�

The bill has been amended several times since introduced. Each one lightens some of the proposed regulations that ultimately aim to close some legal loopholes benefiting payday lenders, make payback times more manageable for borrowers and cap those interest rates.

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Proponents of reform see those at various attempts at a compromise.

But the payday lending industry frets too much regulation could force its shops out of business.

A vote was anticipated on the bill as recently as April 11. But a new amendment was added the night before. And no vote was taken. “This compromise amendment is much more generous to the payday lending industry than the initial bill, HB 123, by allowing larger loan sizes, larger payments, and higher rates.

But it would also represent a true step forward for Ohio families by achieving lower prices and more time to repay than in today’s unregulated market,� said Alex Horowitz, a senior officer with the consumer finance project of The Pew Charitable Trusts. “More than a year has passed since HB 123 was introduced, and that delay has already cost Ohio families more than $75 million. This further delay in committee, after a vote had been scheduled, will hurt the hundreds of thousands of Ohio families who are paying the highest prices in the country for payday loans.�

According to Pew’s Small-Dollar Loan Project, the typical annual percentage rate on a payday loan in Ohio is 591%. That’s up to four times more than what borrowers pay in other states, like Colorado specifically.

Pew has been pitching the rules in Colorado as a framework for Ohio, where some of the highest rates are charged in the country.

Pat Crowley, spokesman for the Ohio Consumer Lenders Association, the trade group representing payday lenders, claims those regula-

tions in Colorado have kept any stores from opening there since 2010 and resulted in 75% of locally owned stores there shutting down.

Crowley said the industry is “dedicated� to seeing a bill pass this year “if possible, and if it’s something we could support,� adding “we recognize there are people who can’t pay loans.� “It doesn’t behoove us to have a product that hurts people and not use it more than once,� Crowley said. “So we want to work with people.�

Industry opponents, though, say one issue at hand is that borrowers don’t use those loans once, but over and over. Many taking out those short-term, high-interest loans often get trapped in a cycle of debt as they take out one loan to pay the next, never actually saving money or getting ahead. “Over the past three, four, five years, we’ve seen a lot of people end up at our door because they borrow from payday lenders. By the time they get to us, they may have three to eight payday loans,� said Michal Marcus, executive director of the Northeast Ohio chapter of the Hebrew Free Loan Association in Cleveland and a leader in Ohioans for Payday Loan Reform. “Lots of people think it’s going to be a quick fix and don’t recognize the high interest rates and fees tacked on and don’t realize it’s not easy to get rid of.�

The nonsectarian Hebrew Free Loan Association considers any loan with interest rates higher than 18% predatory, Marcus said. The highest rate she’s personally seen was 790%.

According to Pew, there are some 650 payday lenders in the state in 76

counties. Most are controlled by only a handful of companies, and 66% are run by out-of-state firms.

One Marcus said she sees pop up frequently with those seeking financial help is NCP Finance in Dayton, a credit service organization (CSO) that brokers loans for lenders.

There are already Ohio laws capping interest rates on payday lenders, but a loophole allows firms to organize as CSOs, effectively circumventing those rules. Closing that loophole is a key feature of the reform being sought. “There are six payday loan companies that control more than 90% of the Ohio market. They are all open through these legal loopholes,� said Pew director Nick Bourke. “It’s clear they don’t want real reform.�

Marcus said she’s hopeful that lawmakers will pass some useful reform soon. If there continues to be no progress on that front, though, she said plans are in the works to present reform to voters via a ballot initiative in spring 2019. “I believe it’s the job of the legislature to do this. But we’ll bring to the people if the legislature can’t follow through with what needs to be done,�

Marcus said. “We’ll move forward with it if they can’t bring a fair bill forward.� “I think the people in the business community need to be engaged in this because the more we support our community around us, the more we build people up to a better place,�

Marcus added. “If we are not pushing people down with these payday loans and help people get financial independence, they can support the local economy in a more efficient and better way.�

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Ken Goetz: 330.748.4632 | Gary Wimer: 330.748.4631 Managing Directors, Real Estate Industries Division HomeSavings.com

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President, VictoryShares and Solutions

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A dominant theme of the Trump administration is one of uncertainty and that’s translating to an increased level of unknowns in the financial market. That means volatility, which, in turn, is creating fresh concerns for professional investors who are increasingly questioning the life left in the prevailing bull market.

A recent report by Bank of America Merrill Lynch, which surveyed fund managers in March, saw 30% of respondents report trade fears among their greatest worries for global markets. The next greatest concerns are over inflation and global growth. Those factors have some investors fretting over returns and downside — concerns that simply weren’t on their radar screens even just several weeks ago. With that in mind, Crain’s spoke with Mannik Dhillon, the Cleveland-based president of VictoryShares and Solutions, a division of Victory Capital Management — the largest money manager in the Northeast Ohio market by local assets under management — for his perspective on how he and his firm are viewing the markets and the surrounding volatility. — Jeremy Nobile There’s a lot more volatility out there today. That may come in cycles, but does the state of the market today worry me as the investor?

Well, it’s definitely interesting times. But that really depends on the perspective you have and where you’ve been with your portfolio for the last nine years.

We do tend to easily forget things as a society. When we came to 2008 and the recession, everyone forgot about the tech bubble. In times like that, you need to make sure your portfolio is right. People came in five years ago when the

market was rich, but people are starting to talk about those things again. We can’t forget what happened, but how long do we keep hanging on?

It’s a natural response, right? You see those stock values tank and want to abandon ship even though a rebound could be in store.

That’s really the biggest challenge, and it’s always faced investors: those behavioral and emotional biases. That’s the challenge more than the market itself. It’s all about our own behaviors and emotions at troughs or peaks.

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EXP3RT1S3 As investors worry about the financial markets today, what do you tell them? And how do you battle those desires for impulsive, knee-jerk reactions?

On the institutional side, what we try to harp on constantly is that thereâ&#x20AC;&#x2122;s no silver bullet. Thereâ&#x20AC;&#x2122;s no crystal ball. The only free lunch left is in diversification. We have many different investors and in different ways, theyâ&#x20AC;&#x2122;re all diversified at the end of the day. Thatâ&#x20AC;&#x2122;s really the only thing people can do.

Is the volatility out there today simply a function of the cyclical nature of the markets?

The market we are in now is different, but similar in many ways. In years past, volatility was at an all-time low. It was easy. You could invest in index funds and do well with low risk and low cost. And youâ&#x20AC;&#x2122;d look like a rock star. Now as volatility returns, thatâ&#x20AC;&#x2122;s when skill matters.

Thatâ&#x20AC;&#x2122;s where value is going to be added significantly.

This kind of sounds like a plug for active fund management versus passive investing.

But that expertise is going to matter going forward. Whatâ&#x20AC;&#x2122;s challenging for the end investor is, itâ&#x20AC;&#x2122;s not going to be as simple as picking the low-cost provider in the index. You canâ&#x20AC;&#x2122;t just throw a dart at a few different products and do pretty good. When returns narrow and dispersion increases, selection is going to matter a lot. But thatâ&#x20AC;&#x2122;s just one part of it. After the financial crisis, at my prior firm, we saw time horizons

â&#x20AC;&#x153;Now as volatility returns, thatâ&#x20AC;&#x2122;s when skill matters. Thatâ&#x20AC;&#x2122;s where value is going to be added significantly.â&#x20AC;? starting to compress even for more sophisticated investors. Whatâ&#x20AC;&#x2122;s a full market cycle then? Some think of it as five years. Or maybe seven.

Sound like this is where you tell me patience is a virtue.

It is. Right now, the markets are reacting to information that is more short term. Part of that is a function of the lack of certainty as to the actual impact of the information thatâ&#x20AC;&#x2122;s coming through.

Youâ&#x20AC;&#x2122;re referring to information largely flowing from Trump and the administration, whether thatâ&#x20AC;&#x2122;s a leaked report of the presidentâ&#x20AC;&#x2122;s next action of an early-morning tweet, yes?

Right. Consider geopolitical risk with North Korea, notions of a trade war through tariffs. If you ask anybody either selling or buying specifically on that news, I would challenge how much information they really have to make a longterm assessment on the impact of that at a fundamental level right now. Itâ&#x20AC;&#x2122;s unclear. Itâ&#x20AC;&#x2122;s just headlines right now. Has anyone really sat down to filter that through forecasts, earnings etc.?

The market doesnâ&#x20AC;&#x2122;t react to that as much anymore. Itâ&#x20AC;&#x2122;s reacting to short-term news. The next day, it shrugs it off. And the market comes back up.

So thatâ&#x20AC;&#x2122;s whatâ&#x20AC;&#x2122;s at the heart of the uncertainty and volatility today, right?

Uncertainty is never good for market volatility. Itâ&#x20AC;&#x2122;s just the type of information the market has and is concerned about. It can be as simple as a tweet or a headline. It could be an executive order or something a foreign government said or did and then the markets factor it in. Fifteen years ago, there werenâ&#x20AC;&#x2122;t computers on the sidelines trying to react to what the market is doing, not like today. Sure, itâ&#x20AC;&#x2122;s always existed to some extent. But itâ&#x20AC;&#x2122;s important to determine which of these short-term news events might have long-term impacts. As an individual investor, yes, that can be very difficult to do.

So as investors come to you concerned, worrying about whether they need to shuffle money around, what do you do?

Thatâ&#x20AC;&#x2122;s where the patience is a factor.

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PA G E 18

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A P R I L 16 - 2 2 , 2 018 |

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

THE LIST

Money Managers

Ranked by regulatory assets under local management ASSETS UNDER LOCAL MGMT AS OF DEC. 31 (MILLIONS) ADV ASSETS MINIMUM % WITH ACCOUNT (MILLIONS) CHANGE DISCRETION (1) SIZE

COMPENSATION STRUCTURE (2)

PRIMARY LOCAL ADVISORY SERVICES

CIO/ HEAD OF INVESTING TOP LOCAL EXECUTIVE

$10,000,000

Percentage of AUM

Portfolio management

CIO at franchise level

David C. Brown, chairman, CEO

$7,993

$1,000,000

Fee only, percentage of AUM

Portfolio management

Brian L. Gevry

Brian L. Gevry, CEO, CIO; Timothy M. Hyland and Michael E. Bee, managing partners

$4,755

$518,660

$1,000,000

Performance based or percentage of AUM

Portfolio management for individuals, businesses and institutionals; financial planning; investments in unlisted securities

Kathleen Fisher

Shane McRann Bigelow, senior VP, managing director

32.2%

$4,194

$6,294

$500,000

Percentage of AUM

Portfolio management, financial planning, retirement plans

John P. Micklitsch

Frederick D. DiSanto, chairman, CEO

$4,724.4 $3,913.5

20.7%

$4,054

$4,724

$500,000

Fee based on AUM; set fee for non-investment services

Financial planning, portfolio management for individuals, selection of other advisors

John D. Zaller

Richard J. Buoncore, managing partner

Wasmer, Schroeder & Company LLC 1111 Superior Ave., Suite 1100, Cleveland (216) 622-0000/www.wasmerschroeder.com

$3,046.7 $2,927.7

4.1%

$3,011

$8,311

$500,000

Percentage of AUM

Portfolio management for individuals, businesses, investment companies and institutional clients

Thomas N. Richmond Jr.

John S. Majoros III, director of Taxable Portfolio Management

$2,551.7 NA

NA

$2,538

$3,211

No minimum

Percentage of AUM, hourly rates, fixed fees

Financial planning, portfolio management for individuals, businesses and institutional clients

Russell Moenich

Thomas A. Haught, president

7

Sequoia Financial Advisors LLC (3) 3500 Embassy Parkway, Akron (330) 375-9480/www.sequoia-financial.com

$1,581.9 (4) $1,271.0

24.5% (4)

$1,582

$1,688

$500,000

Fee only, percentage of AUM

Investment research, portfolio management, wealth management

Richard Alt

8

Carnegie Investment Counsel 30300 Chagrin Blvd., Pepper Pike (216) 367-4114/www.carnegieinvest.com

Gary P. Wagner Richard Alt Arthur G. Merriman III, principals

$1,559.0 (5) $1,100.0

41.7% (5)

$1,559

$1,559

$1,000,000

9

Oak Associates Ltd. 3875 Embassy Pkwy., Suite 250, Akron (330) 668-1234/www.oakfunds.com

Percentage of AUM

Portfolio management for business/institional clients and investment companies

Mark W. Oelschlager James D. Oelschlager

Mark W. Oelschlager James D. Oelschlager, co-chief investment officers

Prosperity Capital Advisors 30400 Detroit Road, Suite 201, Westlake (888) 240-0064/prosperitycapitaladvisors.com

$884.9 $665.4

33.0%

$533

$885

$5,000

Fee only, percentage of assets under management

Financial planning; portfolio management for individuals, businesses and institutional clients; seminars/workshops

Clint Pelfrey Jerry Herman

Douglas S. King, president, CEO

North Point Portfolio Managers Corp.

5910 Landerbrook Drive, Suite 160, Mayfield Heights (440) 720-1100/http://nppmcorp.com

$763.4 $702.2

8.7%

$760

$763

$500,000

Percentage of AUM

Portfolio management for individuals, businesses and nonprofits

Diane M. Stack

Ronald J. Lang, president, secretary

Winslow Asset Management Inc. 3333 Richmond Road, Suite 180, Beachwood (216) 360-4700/www.winslowasset.com

$631.0 $553.7

14.0%

$599

$631

$1,000,000

Percentage of AUM

Portfolio management for business/institutional clients, individuals and investment companies

Gerald W. Goldberg Mac Muirhead

Gerald W. Goldberg, CEO, CIO

Beese Fulmer Private Wealth Management 220 Market Ave. S., Suite 1150, Canton (330) 454-6555/www.beesefulmer.com

$606.4 $517.2

17.2%

$606

$606

$500,000

Percentage of AUM, fee only

Portfolio management for businesses, institutional clients and individuals

Dennis S. Fulmer

Dennis S. Fulmer, president, principal

First Fiduciary Investment Counsel Inc. 6100 Oak Tree Blvd., Suite 185, Independence (216) 643-9100/www.firstfiduciary.com

$587.8 $556.5

5.6%

$588

$588

$1,000,000

Percentage of AUM

Portfolio management for individuals, businesses and institutional clients

Mary F. Anderson William S. Henry

Mary F. Anderson, president

14

Van Cleef Asset Management Inc. 3201 Enterprise Parkway, Suite 140, Beachwood (216) 464-0253/www.vancleefinc.com

$537.1 $405.0

32.6%

$524

$537

$1,000,000

15

Percentage of AUM

Portfolio management for individuals and institutional clients

Geoffrey C. Hauck Lino Sergo

Geoffrey C. Hauck, CIO, principal Martin J. Burke Jr., executive VP, principal

16

Elizabeth Park Capital Management 29525 Chagrin Blvd., Suite 318, Pepper Pike (216) 292-5777/http://elizabethparkcm.com

$463.1 NA

NA

$463

$463

$250,000

Fee plus percentage of AUM

Portfolio management for individuals, businesses and institutional clients

Fred Cummings

Fred Cummings, portfolio manager, president

$255.2 $242.7

5.1%

$254

$255

$500,000

Percentage of AUM

Portfolio management for individuals/small businesses

Harry C.C. MacNealy

Harry C.C. MacNealy, CEO

17

MacNealy Hoover Investment Management Inc. 200 Market Ave. N., Suite 200, Canton (330) 454-1010/None

18

Winfield Associates Inc. 700 W. St. Clair Ave., Suite 404, Cleveland (216) 241-2575/www.winfieldinc.com

$238.6 (3) $203.5

17.2% (3)

$238

$239

No minimum

Fee only, percentage of AUM

Portfolio management for individuals/small businesses, financial planning

William W. Baker

William W. Baker, president, CIO

19

Broadleaf Partners LLC 9 Aurora St., Suite 5, Hudson (330) 650-0921/www.broadleafpartners.com

$167.8 $154.7

8.4%

$160

$168

$250,000

Percentage of AUM

Portfolio management for institutional clients and individuals

Doug MacKay

Doug MacKay, CEO, CIO Bill Hoover, president

20

Shaker Investments 3201 Enterprise Parkway, Suite 310, Beachwood (216) 292-2950/www.shakerinvest.com

$145.5 $119.5

21.8%

$146

$146

$100,000

Percentage of AUM

Portfolio management for individuals and institutional clients

Edward P. Hemmelgarn

Edward P. Hemmelgarn, CIO Ray Rund, managing director

21

Atlantis Capital Management 1350 Euclid Ave., Suite 280, Cleveland (216) 802-6622/None

$41.3 $31.9

29.2%

$41

$41

$100,000

Fee only

Portfolio management for individuals

David E. Karam

David E. Karam, president

THIS YEAR

COMPANY LOCAL ADDRESS

2017/ 2016

Victory Capital Management Inc. 4900 Tiedeman Road, 4th Floor, Brooklyn (216) 898-2400/www.vcm.com

$11,540.1 $10,179.3

13.4%

$11,424

$61,817

$7,992.8 $7,500.5

6.6%

$7,302

2

Boyd Watterson Asset Management LLC 1801 E. 9th St., Suite 1400, Cleveland (216) 771-3450/www.boydwatterson.com AB Bernstein 127 Public Square, 50th floor, Cleveland (216) 263-8090/www.bernstein.com

$6,827.2 $6,076.9

12.3%

3

Ancora 6060 Parkland Blvd., Suite 200, Mayfield Heights (216) 825-4000/www.ancora.net

$6,293.7 $4,759.5

5

MAI Capital Management LLC 1360 E. 9th St., Suite 1100, Cleveland (216) 920-4800/www.mai.capital

6

1

4

10 11 12 13

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Want the Excel version of this list Ă&#x2018; and every Crain's list? Become a Data Member: CrainsCleveland.com/data

This list consists of registered investment advisors that manage assets locally and invest at least half of those assets directly into stocks and bonds. Advisors that fall below that threshold appear on our Investment Advisors list.

Information is provided by the companies. Crain's Cleveland Business does not independently verify all information and there is no guarantee these listings are complete or accurate. Send feedback to Chuck Soder: csoder@crain.com.

(1) Total regulatory assets as of Dec. 31, 2017 (2) AUM stands for assets under management (3) Sequoia and Winfield directly invest roughly half of the assets they manage locally, narrowly qualifying them for this list. (4) Includes assets Carnegie acquired when it purchased Midwest Investment Management of Cleveland. (5) Oak Associates said this increase was caused mostly by organic growth in its mutual fund business.

CRAIN’S CLEVELAND BUSINESS

ANALYSIS

Money managers, investment advisers ... what’s the diff?

The lists

By CHUCK SODER

Find the money managers list on page 18. The list of investment advisers is on page 20

csoder@crain.com @ChuckSoder

So what exactly is the difference between an investment adviser and a money manager?

At a glance, the firms on our Money Managers list (page 18) and Investments Advisers list (page 20) might look similar.

In some ways, they are: Technically, the firms on both lists are registered investment advisers regulated by the U.S. Securities and Exchange Commission or, for the smallest firms, by the state of Ohio. That means that they’re all somehow engaged in providing advice related to investments and/or managing portfolios. And the “registered” part means they’re legally bound to act in their clients’ best interests. Making matters more confusing, some firms are hybrids, providing both money management and investment advisory services (more on that later).

So, technically, I could cram them all onto one list — which is what I did last year, the first time I took on this project.

My predecessor had been producing two separate lists, for the most part allowing companies to choose which list they preferred to be on.

But since I didn’t quite understand

what made them different, I lumped them all together.

A few firms on the Money Managers list promptly reached out to politely tell me why I shouldn’t do that.

To summarize what they told me: Pure money managers make direct investments. They research individual stocks and bonds and make the final decision on which ones to buy.

On the other hand, firms that exclusively provide investment advisory services wouldn’t pick individual stocks and bonds. They’d focus on things like mutual funds — which are operated by money managers. In some cases, they’ll make the final investment decisions for their clients; in other cases, they provide guidance and let clients make the final decisions. (On the Investment Advisers list, you can spot firms that always let clients maintain full control over investment decisions: They have zeros in the assets under local management “with discretion” column.)

So if a firm told me that their local offices directly invest at least half of the assets they manage, I put them on the Money Managers list. Other companies went on the Investment

Advisers list (the full digital version includes 26 firms).

A few companies told us they are 100% in the money management category, like Oak Associates of Akron (No. 9 on the Money Managers list) and Elizabeth Park Capital Management of Pepper Pike (No. 16). And the top two firms on our Investment Advisers list, CBIZ of Independence and CAPTRUST, which has an office in Akron, said they make almost no direct investments.

But most of the firms on these lists are not purely in one category or another. For instance, even though HPM Partners is on our Investment Advisers list, the New York-based firm reported that it directly invests roughly 45% of the assets it manages locally (in 2016, HPM told Crain’s that it wanted more individual investment expertise when it acquired Cleveland-based Spero-Smith Investment Advisors, which used to be on our Money Managers list).

And two years ago Sequoia Financial Advisors of Akron appeared on our Investment Advisers list, but this year the firm reported that it directly invests roughly half of its assets, narrowly qualifying them for the money managers list (like HPM, Sequoia in 2016 bought a company that had been on our Money Managers list: RAV Financial Services of Beachwood).

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A P R I L 16 - 2 2 , 2 018

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PA G E 19

PA G E 2 0

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A P R I L 16 - 2 2 , 2 018 |

CRAIN’S CLEVELAND BUSINESS

THE LIST

Registered Investment Advisors Ranked by regulatory assets under local management ASSETS UNDER LOCAL MGMT. AS OF DEC. 31 (MILLIONS) THIS COMPANY YEAR LOCAL ADDRESS

ADV ASSETS (MILLIONS)

2017/ 2016

% WITH CHANGE DISCRETION (1)

MINIMUM ACCOUNT COMPENSATION (THOUSANDS) (2) PRIMARY LOCAL ADVISORY SERVICES

CIO/ HEAD OF TOP LOCAL INVESTING EXECUTIVE

1

CBIZ Retirement Plan Advisory Services 6050 Oak Tree Blvd. S., Suite 500, Independence (216) 447-9000/www.cbiz.com/retirement

$10,518.0 $8,977.9

17%

$942.5

$17,034.6

$1,000

Fixed fees, percent of AUM; hourly

Portfolio management for business/ institutional clients, pension consulting, periodicals, third party administration

Brian Dean

Luke Baum president

2

CAPTRUST 222 S. Main St., Suite 220, Akron (330) 535-4550/www.captrustadvisors.com

$8,199.5 $6,849.3

20%

$658.5

$273,979.4

$1,000

Fee only, percent of AUM

Portfolio management for business/ institutional clients, pension consulting, seminars/workshops, financial planning

Kevin Barry

Steve Wilt senior vice president

3

CM Wealth Advisors Inc. 30195 Chagrin Blvd., Suite 250, Pepper Pike (216) 831-9667/www.cmwealthadvisors.com

$3,120.9 $2,638.4

18%

$2,864.1

$3,120.9

$5,000

Percent of AUM, fixed fees

Financial planning, portfolio management for individuals, businesses and institutional clients

Cynthia Koury

James Wert president, CEO

4

Lincoln Financial Advisors/Sagemark Consulting 28601 Chagrin Blvd., Suite 300, Woodmere (216) 765-7400/www.lfa-sagemarkcleveland.com

$2,845.5 $2,374.0

20%

$0.0

$20,366.1

$100

Flat fee, commission, percent of AUM

NA

David Downing

Brian Deal managing director, Ohio

5

HPM Partners LLC 50 Public Square, Suite 2700, Cleveland (216) 464-6266/www.hpmpartners.com

$2,095.2 $1,999.9

5%

$2,095.2

$7,433.4

$2,000

Fee only

Portfolio management, financial planning and tax planning and compliance

Benjamin Pace

Robert Smith partner, Cleveland market leader

6

Fairport Asset Management 1350 Euclid Ave., Suite 400, Cleveland (216) 431-3000/www.fairportasset.com

$1,774.5 $1,565.4

13%

$1,346.9

$1,774.5

$1,000

Fee only

Financial planning (wealth management), portfolio management for individuals/small businesses, seminars/workshops

John Silvis

Kenneth Coleman Heather Ettinger managing partners

7

Fairway Wealth Management LLC 6055 Rockside Woods Blvd., Suite 330, Independence (216) 573-7200/www.fairwaywealth.com

$1,334.2 $1,151.0

16%

$0.0

$1,334.2

$2,000

Fee based on assets and/or services

Wealth management, investment management, retirement planning, family office services

Mark Weiskind

Daniel Gaugler CEO, managing director

8

NCA Financial Planners 6095 Parkland Blvd., Suite 210, Mayfield Heights (440) 473-1115/www.ncafinancial.com

$899.8 $802.6

12%

$882.6

$899.8

No minimum

NA

Portolio management for individuals and small businesses

Leslie Globits

Kevin Myeroff president, CEO

9

Aurum Wealth Management 6685 Beta Drive, Mayfield Village (440) 605-1900/www.aurumwealth.com

$860.0 (3) $504.6

70% (3)

$697.1

$860.0

No minimum

Fee only

Financial planning, portfolio management for businesses, institutional clients and individuals, pension consulting

Michael McKeown

Eric Wulff Christopher Bart managing directors

McDonald Partners LLC 1301 E. 9th St., Suite 3700, Cleveland (216) 912-0567/www.mcdonald-partners.com

$760.6 (4) $423.1

80% (4)

$459.7

$1,365.6

No minimum

Fee and commission

Portfolio management for individuals, businesses and institutional clients, financial planning, pension consulting

Bill Hegarty

Thomas McDonald president, CEO

10

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM) List excludes companies that directly invest most of the assets they manage locally. Data is supplied by the companies. Send all feedback to Chuck Soder: csoder@crain.com

(1) Total regulatory assets as of Dec. 31, 2017 (2) AUM stands for assets under management. (3) In 2017, Aurum acquired Reghetti Moore Wealth Advisors of Akron, which managed about $180 million in assets. (4) McDonald

Partners hired the employees of Lowrie Carney Wealth Management, adding $350 million in assets under management in 2017.

PAGE 20

μ

APRIL 16, 2018

μ

CRAIN'S CLEVELAND BUSINESS

REAL ESTATE

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A P R I L 16 - 2 2 , 2 018

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PA G E 21

AKRON

FirstEnergy Solutions’ bankruptcy is a boon for attorneys, others

By DAN SHINGLER

Ramco Specialties’ 185,000-square-foot headquarters and main plant has plenty of warehouse room, too.

(Dan Shingler for Crain’s)

Acquisition helps keep Ramco on growth track

By DAN SHINGLER dshingler@crain.com @DanShingler

Hudson-based Ramco Specialties is on an automotive roll.

After building and moving into a 185,000-square-foot headquarters and main plant a little over two years ago, the company has increased its size with the acquisition of Michigan-based Copa Tool earlier this month.

Growth in Ramco’s automotive business, by far its largest end market, is fueling it all, Jeff Melick, Ramco’s director of sales and marketing, said.

“This year, we’re up about 15%,” Melick said, adding that the company has been experiencing a similar growth rate since about 2008, when it began focusing on more engineered products than a simple nut.

Copa Tool is a significant pickup for Ramco. Its $14 million in annual sales will be added to Ramco’s annual revenues of about $100 million.

Copa’s 40 employees bring Ramco’s headcount to about 175 people, Melick said.

The acquisition brings things that might be more important than just sales, too, such as increased manufacturing capacity. While Ramco traditionally has focused on the female end of fasteners — nuts and related threaded assemblies — Copa has high-volume screw machines that can produce bolts and other small precision parts Ramco does not currently make, Melick said.

And it never hurts to have a presence in the metropolitan Detroit area, where Copa is based, alongside domestic automakers and many of their suppliers that are all potential Ramco customers, he noted.

Ramco hopes to bring to bear its chief strength to Copa’s existing customer base, Melick said. That strength is engineering, he said. After the Great Recession, Ramco began to focus more on engineering and less on producing common, low-priced parts like simple nuts.

“That’s a race to the bottom,” Melick said of the highly commoditized realm of simple nuts and bolts, where foreign and domestic suppliers most often compete primarily on price and the cheapest part wins.

The company has found its OEM automaker customers, and their big suppliers, willing to work with Ramco’s engineers earlier in their own design processes. That allows the company to offer fastening systems that can be integrated into other parts, which can make the entire automotive manufacturing process faster and more efficient. Plus, they do not depend wholly on price to gain sales, Melick said.

It must be working, because while some other companies are also finding growth in automotive, the industry as a whole has been on a downward trend, said Edward “Ned” Hill, a well-known Ohio economist and professor of public administration and city and regional planning at the Ohio State University’s John Glenn College of Public Affairs.

Asked whether Ramco or any single company’s recent growth in automotive is due to a rising tide, or just a well-run boat, Hill had a ready answer: “It’s the boat.”

Overall, domestic auto production has been in a slump, Hill said. He noted that data from the Federal Reserve Bank of St. Louis shows that U.S. automakers went from making about 350,000 automobiles per month between 2013 and 2016 to now making about 250,000 units per month.

In other words, if a company is growing, they must be doing something right.

“How a supplier performs is a function of which vehicles it is supplying and how those vehicles sell,” Hill said in an email correspondence.

“An auto supplier that is growing faster than overall domestic production growth rates can only do so in two ways: They are either on a small number of hot products or a larger number of products where a few are picking up market share. Seeing that

the overall tide is bouncing around dead low … they either have a good boat or have attached a decent boat to a good motor.”

Ramco is not unique, at least among Northeast Ohio auto suppliers. Some others report they are also doing well.

Bill Adler, president of Cuyahoga Heights-based Stripmatic Products, also sells heavily into the automotive industry, supplying a range of small, tubular parts. He, too, said business is good as of late.

“Stripmatic is at least 15% over our first-quarter forecast and last year’s sales,” Adler said. “The short-term backlog through June looks pretty solid as well.”

Adler, who said his products most typically find their way into pickups, SUVs and heavy commercial trucks, thinks new tax laws and a reduction of regulations are having a big positive impact on sales.

If the state’s automotive companies as a whole can fare that well, it would be a good thing for Ohio, which still has a huge automotive industry, according to the Ohio Manufacturers’ Association.

“Auto supply remains a huge part of Ohio’s enormous manufacturing sector. State data has shown increasing investment among all transportation equipment manufacturers, and job growth has been steady among transportation equipment manufacturers, presently employing over 125,000 Ohioans,” OMA spokesman Ryan Augsburger said.

For its part, Ramco expects its recent growth to continue and is working hard to earn its place supplying parts for up-and-coming vehicles, Melick said. Copa’s presence and added connections in and around Detroit should only help, since it puts Ramco physically closer to many of its big customers, he added.

“Our product development engineers are very excited to be able to offer domestically manufactured engineered assemblies and components quickly to our Tier 1 automotive customers,” Melick said.

We also will be serving on the unsecured creditors committee,” Goldstein Gragel managing partner Joyce dshingler@crain.com Goldstein said. @DanShingler There also will be plenty of work While the outcome for FirstEnergy for other professional service providSolutions and its creditors has yet to ers, from accountants and consulbe determined, one thing is clear in tants to investment bankers, Merklin terms of the company’s Chapter 11 said.

“There are obviously a lot of conbankruptcy: It’s creating a boom for lawyers and some other profession- sultants, whether they are financial consultants or management consulals.

The case is not only engaging many tants,” he said. “There will be investof the best local bankruptcy attor- ment bankers — to sell assets or segneys, but it is bringing a lot of nation- ments of businesses. … If there are al talent to Northeast Ohio, more (valuation) disputes down the road, than other big local Chapter 11 cases, there could be appraisers that are involved or other evaluation experts … local lawyers say.

“The case is attracting the best of And there will be a lot of technical the best, locally and from across the experts, too, especially relative to the country. These are people at the top nuclear facilities.”

Some of the isof their games,” sues that need to said Jean Robert- “We’ve been involved be addressed are son, a longtime bankruptcy attor- in many large Chapter particularly arcane and will ney in Cleveland 11s, some in need extremely and general specialized excounsel for Beck Northeast Ohio and pertise. For inAluminum and some in other areas. stance, when was of-counsel with the last time a the Pepper Pike This is certainly the bankruptcy case firm Kaufman, biggest case in had to deal with a Drozdowski & “uranium supply Grendell. “It’s got Northeast Ohio since lease”? a lot of moving But this case is parts that are im- LTV, and it may be also different portant beyond a bigger than LTV.” than previous big local scale.” cases, such the Locally, Ak- — Marc Merklin, managing partner LTV bankruptr o n - b a s e d at Brouse McDowell, which is cies, in terms of Brouse McDow- working on the FirstEnergy how much outell may have got- Solutions bankruptcy case side help is comten the largest chunk of business. It’s representing ing to town.

“There will be some opportunities the main debtor, FirstEnergy Solutions, as co-counsel with Washing- for local people, but I’ve got to beton, D.C.-based Akin Gump Strauss lieve the heavy lifting is going to be done by out-of-town firms,” said HarHauer & Feld.

Brouse managing partner Marc ry Greenfield, a longtime Cleveland Merklin said he’s already got three bankruptcy attorney and a partner primary lawyers and support staff with the Buckley King law firm.

That’s not because there’s a lack of working on the case but added that many more will be pulled in as the local legal talent, he said, but becase moves forward, simply because cause the FirstEnergy Solutions case is so large — with $2.8 billion in debt it’s so large and complex.

“We’ve been involved in many to unravel and more than 13,000 large Chapter 11s, some in Northeast creditors to deal with.

It’s also part of a trend in bankOhio and some in other areas. This is certainly the biggest case in North- ruptcy cases around the country, east Ohio since LTV, and it may be Greenfield said.

“When you go before a judge in bigger than LTV,” Merklin said.

Other local firms are either jockey- any part of the country, behind them ing for or just starting engagements is a seal, and there’s usually Latin written on it. If you know how to read on the case.

It’s still early days, as a secured Latin, it says, ‘Hire local counsel.’ creditors committee was only ap- That used to be the rule, but anymore proved by the court on April 12. But it’s less of a given,” Greenfield said.

Merklin said he’s not surprised his some firms already are plenty busy dealing with a particularly wide vari- firm is working alongside others from out of town, because it’s necessary. ety of issues.

“There’s no way we could handle In addition to the typical creditors one might expect to find in a bank- this locally without help from a large ruptcy case — banks, bond holders firm. There are billions of dollars and and others — FirstEnergy Solutions’ thousands of parties. There’s no way case involves coal companies, rail- any firm in Northeast Ohio could roads, nuclear energy facilities, envi- handle this on its own,” he said.

Many local firms will still be busy. ronmental issues, shareholders and a Several area law firms declined to host of other interests and concerns.

There are also special types of cli- comment for this story because they ents. For example, Cleveland-based had either been hired or were hoping Goldstein Gragel, a labor law firm, is to be hired for the case. But cases like working on the case because it has this are not the gold mine for local law firms that they were in the past. multiple union clients involved.

“It’s not as big a boon to the local “Yes, we are representing seven of the eight unions affected by the case, profession as one would hope or like including Utility Workers Local 270, it was in the ’80s or ’90s, but it will which has been a client for decades. still generate work,” Greenfield said.

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SINITO

man for Hudson Holdings, said in a Thursday, April 12, phone interview that Sinito is among potential investors in the project.

“Talk is talk, and I’ve spoken to everyone in Cleveland and surrounding states about the project,” Greenbaum said. “It sounds wonderful if he’s buying it. (Sinito) and I have a good relationship. He’s one of the most prolific developers in the area.”

However, Greenbaum insisted Hudson Holdings will retain a stake in the project. He said Hudson Holdings is pursuing a plan to add local principals in the several cities where it has acquired properties because the additional financial strength will give lenders more comfort.

Since acquiring Union Trust for $16 million, Hudson acquired big buildings in Louisville and Cincinnati with

similar big plans that also did not proceed. Greenbaum and partner Steve Michael have been named in more than 10 lawsuits around the country, according to a filing in a Florida court case that accused the duo of fraud and violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act in the stalled renovation of a Palm Beach Hotel.

For his part, Greenbaum pooh-poohed the suit as a strategy to get Hudson Holdings out of a different project by a partner. He said it is about to be settled.

Asked why Union Trust and the other big-ticket renovation projects in other cities stalled, Greenbaum blamed a tightening lending environment and their complexity.

“In New York, Union Trust would be like a studio apartment,” Greenbaum said. “In Cleveland, it’s massive and lenders are wary. We’re making progress on a lot of fronts. This is a big project with a lot of moving parts.”

Lots of parts, indeed. Sinito is said to be adding new elements to the Union Trust plan, such as for-sale condominiums and a banquet center.

The banking room has already hosted multiple events since Hudson Holdings landed the property in 2015.

However, that would give Millennia’s restaurant group, operated by

thriving communities.” Access to arts and culture, she said, is central to that. And while Key and the Rock Hall are holding the details of the partnership close to the vest for now, Mooney said the timing of the announcement was very intentional.

“We want the broader music world to understand how important this is to Cleveland,” she said.

Key’s relationship with the museum dates back to its founding. For years, Key has been a financial backer of the Rock Hall’s educational offerings, community programs and, of course, the induction ceremonies.

The Rock Hall relies on corporate backing to help foot the roughly $6.8 million bill for the inductions when they’re held in Cleveland, which now happens every two years. This year, all of the tables and sponsorship opportunities sold before the inductee class was even announced.

Also, Dennis Devine, co-president of Key Community Bank, was ap-

pointed to the Rock Hall’s board of trustees in 2016. It’s also worth noting that the Rock Hall sits at One Key Plaza. “(Key) really believed in what we’re doing and Harris stepped up to support all of the great work we’ve done and are going to do,” Harris told Crain’s prior to the public unveiling.

He added, “This follows on the heels of other wonderful gifts that have propelled the Rock & Roll Hall of Fame forward in a major way.”

Last year, retired Sherwin-Williams CEO Chris Connor and his wife, Sara, committed $9 million. At the time, it was the largest gift in the museum’s history and was recognized with the family’s name being added to the new theater. The New York City-based Rock & Roll Hall of

Fame Foundation also has been a major philanthropic contributor, having pumped more than $20 million into the museum over the years.

It recently, for instance, contributed $5 million toward the museum’s transformation efforts.

The KeyBank announcement comes just a few weeks after Pittsburgh-based PNC, the bank that ultimately acquired Cleveland’s National City a decade ago but still boasts a sizable Northeast Ohio footprint, announced a five-year, $3.75 million sponsorship arrangement with the Rock Hall. Also, the PNC Foundation, the bank’s philanthropic arm, pledged $375,000 toward the Rock Hall’s Toddler Rock educational program, which brings the PNC organization’s total commitment over the next five years to more than $4.1 million. Over the past decade, PNC has pumped roughly $8 million into the Rock Hall, according to Paul Clark, PNC’s regional president. (Fun fact: It was Clark who hand-delivered the

CONTINUED FROM PAGE 1

The Ohio Development Services Agency has told Hudson Holdings, which holds the property through HH Cleveland Huntington LLC, it needs to show continued progress by June’s end or the credit may be rescinded.

In a 2017 interview with Crain’s, Sinito mentioned his interest in the project to redo the almost-empty 1.3 million-square-foot office building, which confirmed rumors that Hudson Holdings was shopping the deal or seeking investors.

The latest development is that Sinito is identified as the agent of record for two companies with tell-tale names formed Monday, April 10, with the Ohio Secretary of State: 925 Euclid Investment LLC and 925 Euclid Manager LLC. Forming the entities, which bear names similar to those Sinito used to buy the Statler, would be a necessary step as the deal nears a reported closing around month’s end.

Sinito, who moved the headquarters of his Millennia Cos. apartment concern to the 57-story Key Tower last year, declined to be interviewed

by Crain’s.

However, Andrew “Avi” Greenbaum, principal and chief spokes-

ROCK HALL CONTINUED FROM PAGE 1

Some of the museum’s most recent investments include the Power of Rock Experience in the new Connor Theater that debuted last summer.

Also, the museum recently unveiled its new “Hall of Fame Experience” exhibit on its third floor, which opened the weekend before this year’s induction ceremony and showcases the 250-plus acts that have been enshrined. The museum has also undergone a number of cosmetic changes in recent years — notably, splashes of deep reds and blacks and artist photography have livened up what had been an almost clinical-feeling space in the iconic I.M. Pei-designed building on Lake Erie’s shore Details on how the funds would be used are expected to be announced in June, but Mooney said the gift ties into Key’s mission of “supporting

The million-square-foot 925 Euclid Ave. building (center) dominates the northeast corner of one of downtown’s key intersections. (Stan Bullard)

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To place your listing or for more information, please call Debora Stein at (212) 210-0274 or email dstein@crain.com

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Vice President, Commercial Banking

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check that covered the architectural fee for I.M. Pei.) Harris said the arrangement with PNC is not affected by the announcement from Key, which is headquartered in Cleveland. Key is the region’s second-largest bank in terms of local deposits, while PNC sits in third, according to Crain’s annual ranking.

Columbus-based Huntington National Bank leads the pack.

As part of PNC’s sponsorship arrangement, the bank’s branding is being tied with several of the museum’s major events and initiatives.

“Celebration Day Powered by PNC” on April 7 served as the kickoff to a weeklong celebration in the run-up to the induction ceremony. The kickoff included free admission to the Rock Hall, fireworks and live performances on the PNC main stage on the Rock Hall’s plaza. That performance was headlined by Bon Jovi founding member and 2018 inductee Richie Sambora.

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Sinito’s wife Malisse, yet another food venture downtown.

Besides the Marble Room Steak and Raw Bar in the banking room at The Garfield, Millennia is putting a new restaurant in updated restaurant space at the Marriott at Key Center and recently opened an event center in the former Club dining room at Key. Sinito is also said to be undertaking restoring the ballrooms of the Statler as part of improvements to Statler.

Building permits on file with the city of Cleveland show renovation of commercial space as well as the addition of two more suites to 297 at The Statler. A legal notice filed in Cuyahoga County land records said $7 million in updates is underway there.

If Sinito’s Millennia snags the 1924-vintage Union Trust and gets the project going, it will erase the cloud that has grown for decades over one of downtown Cleveland’s largest buildings for decades.

Often called “Main and Main” in downtown, the imposing 20-floor building once hosted top-tier tenants such as Jones Day, the predecessor of Squire Patton Boggs to the predecessor of EY and others that have vacated for new buildings over the last 30 years.

Huntington Bank’s regional offices moved from the building to 200 Public Square, the former BP Building.

William Galonski joins Western Reserve Group in Wooster as the Vice President of Claims. As a graduate of the Ohio State University with several insurance designations, he has an extensive background in the insurance industry and brings a wealth of Claims leadership and acumen to WRG. Having grown up in Northeast Ohio, William is excited to be moving back to the area, and he is a welcome addition to the Executive team at Western Reserve Group.

John A. Rego has joined Benesch from as a partner and will serve as Chair of Benesch’s Environmental Litigation Practice Group. With three decades of experience as an environmental advocate for clients and training as a chemical engineer, John resolves environmental disputes by blending sound scientific positions with practical legal guidance.

KNOW SOMEONE ON THE MOVE? For more information or questions regarding advertising in this section, please call Debora Stein at (212) 210-0274 or email: dstein@crain.com

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Sean Joyce

President and executive director, Stan Hywet Hall & Gardens When Sean Joyce began his tenure at Stan Hywet Hall & Gardens — the historic estate and manor house of Gertrude and F.A. Seiberling, co-founder of Goodyear Tire & Rubber Co. — he had a not-so-simple directive: “We have to make Stan Hywet a living, breathing part of the community.” That was in 2010, when Joyce came on as CFO and vice president of operations after stints in financial and development roles in the parking industry and at Goodwill Industries. In January, Joyce became president and executive director, succeeding Linda Conrad. Behind his directive, Joyce has helped put Stan Hywet on stable financial footing, boosted annual attendance and opened up a world of family programming. He’s also overseeing restoration and upgrades to the estate. — Sue Walton

Five things If you could meet one famous figure from history?

Martin Luther King Jr. “Martin Luther King to this day seems like a pinnacle of backbone and confidence and a true inspiration to so many.”

Fascinating history Among the thousands of letters, photos and other artifacts in the Stan Hywet collection are a copy of a Charles Dickens novel signed by the author and a lock of Abraham Lincoln’s hair. “F.A. (Seiberling) was a huge Lincoln fan and follower.”

Triple threat Joyce played soccer, basketball and baseball in high school.

Drive-time listen Sports radio

First time he realized disappointment The Browns’ Red Right 88 play that lost them a playoff game in January 1981

Lunch spot Papa Joe’s 1561 Peninsula Road, Akron

The meal One had a Caesar salad with grilled chicken and a diet Coke; the other had a cranberry chicken salad with an iced tea.

The vibe This place exudes old school Italian, from the stone entry way and the white tablecloths, to the dim lighting. The business, around for more than 80 years, is an Akron icon and serves up traditional Italian favorites, sandwiches and salads.

The bill $ 32.21, plus tip

What attracted you to Stan Hywet?

Right after 2008 happened with the economic collapse, a lot of organizations were struggling through that, Stan Hywet being one of them. At the end of 2009, a mutual board member who was also on the board of Stan Hywet and seeing what I was doing at Goodwill approached me in a casual conversation. Stan Hywet had just hired Linda. They had been without a CEO for about a year. They were having some issues recovering from losing a big chunk of their foundation and losing some leadership, and really trying to get a hold on the financial situation. The CEO was in need of a partner, a CFO, to help get them there. I just had coffee with Linda in January 2010, and we just talked about our backgrounds and what her challenges were to get a sense of if I could help and to make sure we had the same philosophy and would want to work together. We talked about everything from what the challenges were and our beliefs on how to lead the staff and how to motivate.

What are your beliefs on how to lead?

I have a lot of ideals on that. I was brought up in a Teamster household.

My dad was in Local 407, worked for UPS for 30 years, and was a union steward. So, caring for employees, looking at fairness and motivation was ingrained in me. I’m a big believer that if people like what they’re doing, the productivity and everything else that comes with their performance will come naturally.

How did you start turning it around after the recession?

There were definitely phases. The first phase was really to get a grip of where they were really. One of the challenges they had was they had converted to a new accounting system right in 2008 when everything kind of went crazy. And it didn’t go very well, so they were having a hard time getting information out of the system. And they were facing some pretty significant deficits when I got there. The first thing I had to do was to dive into their system. They knew the revenue was way down, they knew that what they had to work with was way down. But then everyone is afraid to spend anything, so nothing is getting done. Once we got past being able to see where we were at then, we were able to start looking at where we should make

some investments to bring in some return. And that’s where we started right away. We made some additional investments into our retail business.

We stepped up the store quite a bit.

We started getting a percentage of our catering. And we started a five-year strategy with management.

How was transitioning to CEO completely?

How we got here is something Linda and I both planned as far as how we’ve done this turnaround. So obviously, I’m continuing a lot of the same philosophy and strategies.

What was the plan to attract more visitors?

It was easy for Linda and I to see that our focus needed to be on families.

That was the big miss. In 2010, our youth attendance was only about 6%. Now it’s about 33%. If you’re not bringing families to the estate and property and making real memories with them, who’s going to be your volunteer 20 years from now? Or your donor? So that’s where we honed in our resources. Pretty much every investment we made was somehow geared to making families feel like they could come here. Not just to come here, but let the parents know they can come, too, and enjoy Stan Hywet for what they love and know that their kids aren’t try to drag them out the door as soon as they get here. So it’s got to be something that everyone in the family is going to enjoy.

Architectural Restoration Renovation Consultants, Inc. (ARRC) is Stan Hywet’s for-profit subsidiary that does historic preservation. Tell me a little bit about how that’s going.

That’s the other big part of my work is building that company to go outside the walls of Stan Hywet.

We’re on the cusp of really big things that are going to change Stan Hywet’s financial future. We’re on the cusp of some major projects, and I’ve built some partnerships with some other companies. We’re going to the table on projects that we’re bidding for, and seeing some success. I’m starting to add staff. We’ve proven that we’re good at what we do.

Similar to in the parking industry, we create these partnerships with other companies to align our experiences to be able to go after projects that we couldn’t do on our own. We’re looking to step into not just historic, but commercial projects, nonhistoric.

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